September EM Data Snapshot: More Evidence That Recovery Has Peaked
- Activity figures released over the past month were mixed, strengthening Fitch Solutions’ view that the Emerging Market (EM) recovery peaked in the middle of 2021. Q221 GDP figures released over the past month painted a mixed picture of the state of EMs' recovery.Â
- In EM Europe, the news was mostly positive; however, the news was less upbeat in Latin America. Growth slowed sharply in Chile (3.4% to 1.0% q-o-q) and output fell by 0.1% q-o-q in Brazil. While the pace of contraction eased in the Philippines (-4.2% to -1.3%), Malaysia's economy contracted by 2.0% q-o-q, a much worse result than Fitch Solutions had expected.
- Activity data for Q321 are patchy, but the available data mostly suggest that the recovery in EMs continued to lose momentum. This strengthens the belief that the EM recovery peaked in the middle of 2021, and will now slow as a result of reduced stimulus, fading base effects, accelerating inflation and lingering COVID-19 worries.
(Source: Fitch Solutions)