MUFG’s EM GDP Nowcast Model – August 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 4.1% (4.3% previously) as of July 2023 (consensus 3.9%).
- The regional breakdown of our estimates points to 5.2%, 2.1% and 1.9%, for EM Asia, EM EMEA, and LatAm, respectively.
- Despite stimulus efforts, sequential weakness in China is likely to weigh on the near-term trajectory but, with the drag from last year’s tightening in global financial conditions and higher commodity prices now behind us, we are relatively upbeat on EM growth as we move into the final months of 2023.
- The significant differences in inflationary pressures across EM economies continue to imply the need for different monetary policy paths (more dovish in EM Asia and LatAm than in EM EMEA).
- 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 monetary policy easing where external balances allow.
