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Emerging Markets

Macro Comment Emerging Markets — EM turmoil not the overture for a full-blown crisis

Some emerging markets (EM) have experienced very severe stock market losses and currency weakening this year, particularly since mid-April, and hardly any EMs have avoided the fallout from a stronger USD and tighter global liquidity. On various vulnerability indicators, several EMs (including Argentina and Turkey) indeed look fragile, and we have most likely not seen the worst yet. On the other hand, the current turmoil should not be the beginning of a widespread EM crisis, in our view, as EMs on aggregate are not much worse off now than before the two most recent EM asset sell-offs.

Bjarke Roed-Frederiksen, Senior Economist | bjro03@handelsbanken.dk

Global macro forecast — Global boom starting to cool

• Stimulus measures in the US fuel growth but add risk
• Bottlenecks and higher interest rates slowing global growth
• Protectionism causing uncertainty


Fast Comment China — Growth was still strong in Q3

  1. GDP growth fell only marginally to 6.8 percent in Q3
  2. Monthly indicators improved in September

Bjarke Roed-Frederiksen, Senior Economist | bjro03@handelsbanken.dk

Global macro forecast — Tailwinds now, but autumn storms are coming

• The end of the recovery, into the boom
• Tricky reorientation of monetary policy
• Global slowdown in 2019

Global Macro Comment — A shift in tide for the EURUSD

The weak USD seen throughout the year will gradually feed into higher inflation, which in turn will lift interest rate expectations for the US and strengthen the USD.

Fast Comment China — Activity indicators signal growth slowdown

  1. All three indicators disappointed in August
  2. Infrastructure is dragging down fixed investments
  3. Growth set to slow gradually

Bjarke Roed-Frederiksen, Senior Economist | bjro03@handelsbanken.dk