Emerging markets in the global crisis and beyond

Transcription

1 Emerging markets in the global crisis and beyond May 5, 29 Maria Laura Lanzeni Head of Emerging Markets Think Tank of Deutsche Bank Group

2 Agenda Emerging markets & BRICs as global players Impact of the global crisis on emerging markets Emerging markets outlook M. Lanzeni, May 29 Page 2

3 1 EMs & BRICs as global players EMs: Increasingly important in the world economy EM share in world GDP % Source: IMF EM BRIC World real GDP growth % yoy * includes Asian NIEs Source: IMF WEO Advanced economies Emerging and developing economies* M. Lanzeni, May 29 Page 3

4 1 EMs & BRICs as global players EMs: Integrated in the world economy Outstanding EM trade growth 1993 = Source: IMF EM imports (goods and services) EM exports (goods and services) World trade EMs account for about two-thirds of global FX reserves USD bn 8, 7, 6, 5, 4, 3, 2, 1, Source: IMF COFER Emerging and developing economies Advanced economies M. Lanzeni, May 29 Page 4

5 1 EMs & BRICs as global players EMs: Larger presence in global financial markets BRICs vs developed markets over the past five years USD bn % Bank credit to the private sector 23 3% 6% Bonds outstanding Stock market cap Germany Japan UK US BRIC xx % 8% 19% Bank credit to the private sector 28 Bonds outstanding Stock market cap Sources: IMF IFS, IHS Global Insight, Bloomberg, BIS Sources: IMF IFS, IHS Global Insight, Bloomberg, BIS M. Lanzeni, May 29 Page 5

6 1 EMs & BRICs as global players BRICs: The emerging giants BRIC story is about size % of world GDP and population Growth performance differs Real GDP growth, % yoy GDP Population Brazil Russia India China Medium term Source: IMF Source: DB Research M. Lanzeni, May 29 Page 6

7 1 EMs & BRICs as global players There is more to EMs than BRICs Top ten EMs by GDP 28, USD bn CN RU BR IN MX KR TR PL ID SA Top ten EMs by GDP per capita USD, 28 AE SG HK IL SA CZ HU TW KR PL Sources: IMF, DB Research Sources: IMF, DB Research M. Lanzeni, May 29 Page 7

8 Agenda Emerging markets & BRICs as global players Impact of the global crisis on emerging markets Emerging markets outlook M. Lanzeni, May 29 Page 8

9 2 Impact of the global crisis on emerging markets EM financial markets hit indiscriminately Selected EM currencies Jan 8 = KRW/USD RUB/USD PLN/EUR BRL/USD MXN/USD INR/USD Source: IHS Global Insight Selected CDS spreads Bp Brazil Russia South Africa Turkey Source: Deutsche Bank/Global Markets M. Lanzeni, May 29 Page 9

10 2 Impact of the global crisis on emerging markets Sudden stop in capital inflows Net capital flows to the priv. sector USD bn E 29F Direct investment, net Commercial banks, net Portfolio investment, net Nonbanks, net FX reserves USD bn Russia Korea India China (right) Source: IIF Source: IMF M. Lanzeni, May 29 Page 1

11 2 Impact of the global crisis on emerging markets Trade flows collapsed... Exports % yoy Brazil Russia China Taiwan Israel Turkey Imports % yoy Brazil Russia China Taiwan Israel Turkey Sources: IHS Global Insight, CEIC, DB Research Sources: IHS Global Insight, CEIC, DB Research M. Lanzeni, May 29 Page 11

12 2 Impact of the global crisis on emerging markets... as did domestic activity indicators Industrial production % yoy China Brazil Russia Taiwan Turkey Israel Retail sales % yoy Brazil Russia China Israel Korea Singapore Sources: IHS Global Insight, CEIC, DB Research Sources: IHS Global Insight, CEIC, DB Research M. Lanzeni, May 29 Page 12

13 2 Impact of the global crisis on emerging markets GDP growth fell sharply in Q4 28 and Q1 29 Real GDP growth % yoy Brazil Russia India China Korea Mexico Sources: IHS Global Insight, World Bank M. Lanzeni, May 29 Page 13

14 Agenda Emerging markets & BRICs as global players Impact of the global crisis on emerging markets Emerging markets outlook M. Lanzeni, May 29 Page 14

15 3 EM outlook Much depends on the US and EU outlook IMF too pessimistic? Real GDP growth, % yoy World United States Euro area Source: IMF WEO M. Lanzeni, May 29 Page 15

16 3 EM outlook Commodity prices and financing conditions are key Oil prices and GDP growth % yoy (GDP growth), USD per barrel (Oil price) F 21F RUS (left) SAU (left) Sources: DB Research, IHS Global Insight UAE (left) Oil price (WTI, right) CEE has high financing needs 29 EFR* as % FX reserves PL UA TR ZA MX KR CO BR RU IN CN * EFR = C/A deficit + ext. debt maturing over the next 12 months Sources: IHS Global Insight, DB Research M. Lanzeni, May 29 Page 16

17 3 EM outlook EM governments have announced anti-crisis packages Announced stimulus packages % of 28 GDP AE CN RU KW KZ HK MY BR SA SG VN TH CO KR TR TW PH IN CL CZ MX PL EG ID AR PE Source: DB Research M. Lanzeni, May 29 Page 17

18 3 EM outlook EM central banks in easing mode Policy interest rates % yoy Jan 8 Mar 8 May 8 Jul 8 Sep 8 Nov 8 Jan 9 Mar 9 Brazil Chile Korea Israel Turkey Sources: National central banks, IHS Global Insight, DB Research M. Lanzeni, May 29 Page 18

19 3 EM outlook Asia to remain fastest growing region Real GDP growth by region % yoy E 29F 21F Asia-1 EE LatAm-7 MENA Africa-1 Source: DB Research M. Lanzeni, May 29 Page 19

20 3 EM outlook China, India lead the BRICs 29F Real GDP growth % yoy F Real GDP growth % yoy BR RU IN CN BR RU IN CN Source: DB Research Source: DB Research M. Lanzeni, May 29 Page 2

21 3 EM outlook Eastern Europe: External adjustment the hard way Real GDP growth % yoy KZ RO UA LV Avg 26-7 Avg 28-9 Credit to the private sector % yoy KZ RO UA LV Avg Avg Source: DB Research Sources: National central banks, DB Research M. Lanzeni, May 29 Page 21

22 3 EM outlook Light at the end of the tunnel? (I) Sentiment indicators keep hope alive Indices Jul 8 Okt 8 Jan 9 Apr 9 EMU PMI US consumer confidence China PMI (manuf.) Korea consumer sentiment (right) Stock markets stabilise for now Morgan Stanley Capital International Indices, 1988 = EM (right) Sources: Bloomberg, Global Markets World (left) M. Lanzeni, May 29 Page 22

23 3 EM outlook Light at the end of the tunnel? (II) EM sovereign bond issuance has picked up 16, 14, 12, 1, 8, 6, 4, 2, Value (USD m, left) No. of deals (right) Source: Dealogic M. Lanzeni, May 29 Page 23

24 3 EM outlook Helping hand: IMF (and other official) lending is back M. Lanzeni, May 29 Page 24

25 3 EM outlook What are the risks for the emerging markets? Deeper-than-expected global recession Protracted US/EU bank liquidity and solvency concerns Increased protectionism World Bank reported 89 new trade-restricting measures by G2 countries since October 28, 23 of which since London G2 Summit in April Domestic policy mistakes that prolong slump EM banking sectors under strain Political and social risks M. Lanzeni, May 29 Page 25

26 3 EM outlook Medium-term outlook for the emerging markets On average, EM growth will continue to outperform But trend growth will be lower than in the boom years Investment story intact Demographics, increasing openness, investment needs (infrastructure), low banking & capital markets penetration, increased macroeconomic stability, rise of middle class, commodities wealth Large markets most attractive; smaller economies may seek regional integration (e.g. ASEAN) Self-insurance policies (FX reserves) not likely to change soon Despite IMF support, risks of high external financing needs and FX exposure laid bare by crisis The EM consumer will gain in importance But improvement in governance & institutions is a precondition M. Lanzeni, May 29 Page 26

27 Thank you! M. Lanzeni, May 29 Page 27

28 Emerging Markets at DB Research Visit us at M. Lanzeni, May 29 Page 28

29 Copyright 29. Deutsche Bank AG, DB Research, D-6262 Frankfurt am Main, Germany. All rights reserved. When quoting please cite Deutsche Bank Research. The above information does not constitute the provision of investment, legal or tax advice. Any views expressed reflect the current views of the author, which do not necessarily correspond to the opinions of Deutsche Bank AG or its affiliates. Opinions expressed may change without notice. Opinions expressed may differ from views set out in other documents, including research, published by Deutsche Bank. The above information is provided for informational purposes only and without any obligation, whether contractual or otherwise. No warranty or representation is made as to the correctness, completeness and accuracy of the information given or the assessments made. In Germany this information is approved and/or communicated by Deutsche Bank AG Frankfurt, authorised by Bundesanstalt für Finanzdienstleistungsaufsicht. In the United Kingdom this information is approved and/or communicated by Deutsche Bank AG London, a member of the London Stock Exchange regulated by the Financial Services Authority for the conduct of investment business in the UK. This information is distributed in Hong Kong by Deutsche Bank AG, Hong Kong Branch, in Korea by Deutsche Securities Korea Co. and in Singapore by Deutsche Bank AG, Singapore Branch. In Japan this information is approved and/or distributed by Deutsche Securities Limited, Tokyo Branch. In Australia, retail clients should obtain a copy of a Product Disclosure Statement (PDS) relating to any financial product referred to in this report and consider the PDS before making any decision about whether to acquire the product. M. Lanzeni, May 29 Page 29