Call us on
+44 (0) 207 045 0920

Economics and Markets

BBH: EM Preview for the Week Ahead

Concerns about the coronavirus are likely to keep EM under pressure, as the ultimate impact is still unknown. Global growth was already at risk before the virus hit and now the outlook is even cloudier.


Brazil reports mid-February IPCA inflation Thursday. Inflation is expected to ease to 4.24% from 4.34% in mid-January. If so, inflation would still be in the upper half of the 2.5%-5.5% target range. COPOM cut rates this month 25 bp to 4.25% and signaled an “interruption” of the easing cycle. Next policy meeting is March 18 and no change is expected then. January current account data will be reported Friday.


South Africa reports January CPI Wednesday. Headline inflation is expected to accelerate to 4.6% y/y from 4.0% in December. If so, this would be the highest since June 2019 and right in the middle of the 3-6% target range. Yet the economy remains sluggish, which is why SARB surprised markets with a 25 bp cut to 6.25% last month. Next policy meeting is March 19 and it’s a tough call. Much will depend on the rand and whether Moody’s downgrades the sovereign rating to sub-investment Ba1.

Turkey central bank meets Wednesday and is expected to cut rates 50 bp to 10.75%. As usual, expectations are split as some analysts are looking for no cut while others see cuts of 50 and 75 bp. CPI rose 12.15% y/y in January and so another cut would move real rates further into negative territory. In turn, this would likely keep downward pressure on the lira despite official efforts to support it.

Poland reports January industrial output and PPI Thursday. The former is expected to contract -0.6% y/y while the latter is seen steady at 1.0% y/y. Construction output and real retail sales will be reported Friday. The former is expected to contract -3.2% y/y while the latter is expected to rise 4.2% y/y. Last week, data showed the economy slowing even as inflation continues to accelerate. This puts the central bank in a bind.


China will report January money and loan data this week, but no date has been set. Big jumps in both new loans and aggregate financing are expected as stimulus efforts ramp up to try and offset the impact of the coronavirus. PBOC sets its monthly Loan Prime Rates Thursday. Consensus sees the 1-year LPR falling 10 bp and the 5-year LPR falling 5 bp. We see chances of a dovish surprise here.

Bank Indonesia meets Thursday and is expected to cut rates 25 bp to 4.75%. The market is split, however. Of the 304 analysts polled by Bloomberg, 18 see a cut and 12 see steady rates. CPI rose 2.68% y/y in January, the lowest since March 2019 and near the bottom of the 2.5-4.5% target range.

Taiwan reports January export orders Thursday, which are expected to contract 67.3% y/y vs. +0.9% in December. Due to the timing of the Lunar New Year holidays in 2019 and 2020, January data will likely be depressed. While February would typically see a strong bounce-back, the impact of the coronavirus is likely to prevent this from happening. Q4 current account data will also be reported that day.

Korea reports trade data for the first 20 days of February Friday. This will be one of the first snapshots on how the coronavirus has impacted regional activity. The Bank of Korea has kept rates steady at 1.25% since the last 25 bp cut in October. At the January 17 meeting, the bank sounded more upbeat, but things have deteriorated since then. Next policy meeting is February 27 and we think the bank will have to take a more dovish tone.

Economics and Markets Global

Companies mentioned in this article

Win Thin is the Global Head of Emerging Markets Strategy and has over 25 years of investment experience. He has a broad international background with a special interest in developing markets. Prior to joining BBH in June 2007, he founded Mandalay Advisors, an independent research firm that provided sovereign emerging market analysis to institutional investors. Prior to that, Win was a vice president and international economist, covering major emerging markets in Asia and Latin America for Alliance Capital Management

Recommended Stories