(Bloomberg) -- (Bloomberg Economics) -- Emerging-market growth and policy rates are diverging from those in the US. That doesn’t fully insulate those economies from a consequential US election. An underwhelming BRICS+ summit in Russia suggests EMs need to coordinate better if they want to progress as a bloc.
Our big takeaways from the past month:
- EM rate moves are out of sync with the Federal Reserve, contrasting with previous cycles. Several began easing well before the US central bank, and some — like Brazil and Russia — have even hiked after an initial Fed cut. Growth has also diverged among EMs.
EM Rate Moves Decoupled From the Fed This Cycle
- Donald Trump’s win in the US election will matter for EMs, but the impact may differ depending on countries’ external vulnerability and trade dynamics. Egypt, Argentina and South Africa are more vulnerable to higher global rates. Mexican exports could slide by double digits if there’s an aggressive US tariffs policy. Brazil’s shipments would likely drop by less than Mexico’s, but more than other EMs.
External Vulnerability Scorecard
- An expanded BRICS is gaining economic heft, but has done little to expand its influence. Bloc leaders disagreed at the October summit on whether to invite Venezuela and Turkey. A key goal — de-dollarizing reserves and trade settlement — remains distant. Membership has done little to boost trade by and among partners. The group may need to offer more incentives to steer countries toward currencies other than the US dollar.
BRICS Could Be Double the Size of G-7 in 2030s
(Updates to reflect US election result.)
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