Daily Archives: January 8, 2014

Debates persist in the US and eurozone about growth and job creation versus fiscal discipline. This false choice diverts fiscal focus away from a balanced approach that could achieve both imperatives. Such false choices also contribute to the failure of our political systems to better address continuing hardship through advancing growth and employment, and through programmes such as the unemployment insurance extension. Moreover, that political failure has also contributed to central bank decisions to employ unconventional monetary policies that create widely under-appreciated risks. Read more

Now among the world’s most dynamic emerging markets, Turkey has proven a remarkable success story in recent years. In the decade since Recep Tayyip Erdogan, prime minister, and his Justice and Development Party (AKP) first rose to power, economic growth has broadened beyond the traditional northwestern Istanbul-Ankara-Izmir triangle and the well-connected secular elite to include new companies and investors from the country’s heartland. Per capita income has tripled in nominal terms, and Turkey has become an influential actor on the global stage. Read more

One striking aspect of last year’s markets is the extent to which emerging market assets underperformed those in advanced economies. As investors search for returns this year among some frothy asset markets, such unusual underperformance attracts even greater attention.

Emerging markets’ underperformance was broad-based, affecting virtually every asset class. EM equities underperformed the aggregate world index by a stunning 29 percentage points as measured by their MSCI index components. In external credit, the return on EM sovereign bonds was a notable 14 percentage points lower than that on high yield bonds (as measured by JPM EMBI Global and ML HY indices, respectively). Local currency EM bonds did even worse, returning minus 9 per cent according to the GBI EM index. Read more