(Finance) – In recent months, emerging markets (EM) recorded significant portfolio outflows. This is what the monthly update of S&P Global Ratings semerging markets reporting that the tightening of financing conditions, land expectations of a slowdown in developed economies and the geopolitical situation are contributing to portfolio outflows from EM, especially from China.
The external context for EM is getting worse, ed S&P expects the pressures on emerging assets to continue. The uncertainty is also widened by a greater polarization of the political landscape in some emerging countries, which could further intensify capital outflows.
With the exception of energy and foodcommodity prices have mostly returned to pre-2022 values. Expectations of a global slowdown have reduced demand for most commodities, especially industrial metals. However, food and energy prices remain high. Price developments in commodity markets have therefore become less favorable for many EMs in terms of exports, but continue to fuel inflationary pressures as energy and food prices remain above pre-existing levels. 2022.
As for the slowdown in the US economy, more marked than expected, “poses risks to the ripple effects linked to trade and China. From a commercial point of view (either directly or through the secondary commercial impact), Mexico, Thailand and Malaysia appear to be the most affected. However, if disinflation were to result from a weaker-than-expected US economy, the Federal Reserve will likely suspend its monetary tightening cycle.he should help cushion the impact on emerging economies by improving financial conditions and encouraging a return of capital flows to EMs.