MUFG’s EM GDP Nowcast Model – October 2023

  • Our EM nowcast modelling framework that we launched earlier this year (see here) now estimates EM real GDP growth (seasonally adjusted annual rate) in Q2 2023 at 4.9% (4.3% previously) as of September 2023 (consensus 3.9%).
  • The regional breakdown of our estimates points to 5.4%, 2.2% and 1.9%, for EM Asia, EM EMEA, and LatAm, respectively.
  • A global environment marked by an unfavourable growth-inflation mix, higher rates, low liquidity and a strong US dollar poses a challenges to the top-down EM view and lends itself to a bottom-up approach in search for EMs with robust fundamentals and sizable risk premiums.
  • We expect EM growth to trough this year but remain below potential in the 2024 recovery. The silver lining is that subdued growth should cap inflation, facilitating EM monetary policy easing ahead of the DM (where external balances allow).

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