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Conventional wisdom is
that any rise in US interest rates spells bad
news for emerging markets. The US Federal
Reserve approved the second rate hike of 2017
last week but, instead of the doom-mongering
that would normally ensue, most of the
commentary about what this means for developing
countries has been unusually sanguine. There
are a few reasons for this subdued reaction.
Firstly, the Fed appears to be taking a gradual
approach to interest rates so that rises are
well signposted and their impact is
lessened.
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Secondly, most emerging
markets are now in a better position to withstand
the impact of any tightening of US monetary policy
having reduced the credit gap in their economies.
Finally, there appears to be a growing realisation
that the fortunes of emerging markets are not as
closely tied to US interest rates as had been
assumed.
The latest rise comes at a time
of rising positivity around developing countries
that is supported by strong growth data coming out
central and eastern Europe. The IMF also raised
its growth forecasts for China last week – the
second time it has done so this year. At EMIS, we
have a natural optimism about the long-term
prospects of markets so it is hugely encouraging
to see how resilient most of these countries have
become to events that might once have weighed them
down.
Guy Dunn
P.S. Here are a
few articles on the impact of the US rate hike
from the EMIS platform last week. | | |
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CHINA FOOD AND
BEVERAGE SECTOR 2016/2017
Food and beverage
manufacturing is one of the most important
sectors of China’s economy, as it provides
sustenance to almost 20% of the world’s
population. The sector also provides an impetus
for the development of related industries such
as agriculture, transportation, machinery and
vehicle manufacturing, and
retail.
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CEIC DATA POINT OF
THE WEEK | | |
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CEIC
Data is a sister company of EMIS and
part of the Euromoney Data
Division |
INDIAN AUTOMOBILE
SALES GREW IN MAY
2017
Indian Automobile sales
grew with 9.6% in May 2017 which marked the
fourth consecutive month of positive growth. The
booming sector was affected by the
demonetization of November 2016 and experienced
an annual decrease for the period November 2016
– January 2017 (being hit particularly hard in
December -16%).
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Below are the
most read articles in the past week on EMIS
Perspectives, our daily blog of emerging market
news and insights. | | |
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VIETNAM CAR SALES
EDGE UP BY 6% IN
MAY Sales of
automobiles in Vietnam has reached 23,232 units
in May, a 6 percent increase from the previous
month, Intellasia reported citing data from
Vietnam Automobile Manufacturers’
Association. |
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NORWEGIAN STATOIL
WANTS TO TRIPLE BRAZILIAN
PRODUCTION Norwegian oil and gas
company Statoil wants to more than triple its
Brazilian production, Petroleum Bazaar –
PetroMag reported on Tuesday citing Anders
Opedal, Statoil's head of Brazilian operations
as saying to Reuters.
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PUERTO RICO VOTES
IN FAVOUR OF BEING 51ST USA
STATE Puerto Rico has voted
overwhelmingly in favour of becoming USA’s 51st
state, Daily Mirror reported citing Reuters.
According to a government website for the
non-binging referendum, 97% of the voters
supported
statehood.
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TOYOTA REAFFIRMS $
3.94BN INVESTMENT IN MEXICAN
STATE Japanese vehicle
manufacturer Toyota has reaffirmed its
investment plan for the Mexican state of
Guanajuato. The company will invest
approximately USD 3.94bn in a new factory and it
will generate over 5.000 jobs in the state
between 2019 and 2020.
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FIRST IKEA STORE IN
SERBIA TO OPEN IN
AUG Swedish home furniture
retailer IKEA will open its first store in
Serbia on August 10, BBJ - Regional Today
reported on Tuesday citing the chief executive
of the company for South East Europe (SEE),
Stefan Vanoverbeke as
saying. |
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QATAR TO BUY FROM
US MILITARY AIRCRAFT IN $12BN
DEAL Qatar to buy from the US
F-15 fighters under a $12 billion deal, AFP
reported on Thursday. The US Secretary of
Defense Jim Mattis and his Qatari counterpart
Khalid al-Attiyah signed a letter of agreement
for this deal on
Wednesday.
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