Perspectives connected to the research.
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Escalating trade tensions between the United States and China triggered a reversal signal in emerging market portfolio flows on August 6, 2019. Gregory Basile and Jonathan Fortun stress that the withdrawal extended broadly across emerging markets. A bilateral trade shock was therefore transmitting through international investment beyond the two economies at its center.
Read the workDebt sustainability risks differed sharply across emerging markets in July 2019. Boban Markovic, Jonathan Fortun and Sergi Lanau distinguish high and rising debt in Brazil and South Africa from refinancing pressure linked to large debt service in Egypt, Lebanon and Pakistan. Their systematic assessment highlights fiscal vulnerabilities beyond headline debt ratios alone.
Read the workExpectations of Federal Reserve rate cuts did not weaken the dollar against other major currencies in July 2019. Gregory Basile, Jonathan Fortun and Robin Brooks identify simultaneous easing signals from other central banks and a reduced exchange rate response to interest differentials. Both mechanisms limited the currency impact of a more accommodative Fed outlook.
Read the workA recovery in Chinese equities helped emerging market portfolio inflows reach $40.8 billion in June 2019, their strongest reading in five months. Gregory Basile and Jonathan Fortun distinguish $12.6 billion of equity investment from $28.2 billion in debt. The broader net capital flow measure recorded outflows in May, highlighting the difference between periods and coverage.
Read the workSmaller current account deficits did not eliminate emerging markets’ external financing risks in June 2019. Large debt repayments still warranted caution, particularly in Turkey and South Africa. The assessment also identified resident capital outflows as a vulnerability in Turkey and Argentina, where import compression had improved the current account without removing financing pressures.
Read the workLow underlying inflation challenges estimates that treat much of the euro area periphery’s unemployment as structural. Gregory Basile, Jonathan Fortun and Robin Brooks use the Phillips curve to compare unemployment gaps with inflation outcomes. Their June 2019 analysis argues that conventional measures understate remaining economic slack and overstate structural unemployment in those economies.
Read the workRecovering equity investment in emerging Asia triggered an IIF portfolio flow surge alert on June 3, 2019. Gregory Basile and Jonathan Fortun identify China as a key driver of the rebound. The recovery followed trade tensions that had produced the largest emerging market capital outflow in six months.
Read the workFortun and fellow IIF economist Greg Basile connect renewed capital outflows across emerging Asia to escalating US–China trade tensions, while noting more resilient bond investment.
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