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16 Jul 2013
Flash: Emerging Markets downside risk - JP Morgan
FXstreet.com (London) - Jan Loeys, JP Morgan research, said over the past 18 months, they have cut their 2013 EM growth forecast from 6% to 4.%.
"We continue to see downside risk with activity data tracking below our Q2 projections and no evidence of policies to reverse this slowdown." A number of EMs have inflation pressures and weaker currencies, he said, that require tighter monetary policies while wage pressures have eroded profit margins and thus corporate expansion. "This slowdown has momentum. At some point, the EM slowdown could drag DM along. At the moment, we protect ourselves by underweighting EM assets and base metals."
"We continue to see downside risk with activity data tracking below our Q2 projections and no evidence of policies to reverse this slowdown." A number of EMs have inflation pressures and weaker currencies, he said, that require tighter monetary policies while wage pressures have eroded profit margins and thus corporate expansion. "This slowdown has momentum. At some point, the EM slowdown could drag DM along. At the moment, we protect ourselves by underweighting EM assets and base metals."