PGIM Fixed Income’s Post

Name: IMF Spring Meetings Takeaways: Potential Immunity of Geopolitical Risks in Emerging Markets
Uploaded: 2024-04-25T14:02:13.438Z
Channel: PGIM Fixed Income
Description: Watch Magdalena Polan, Head of Emerging Market Macroeconomic Research, share key takeaways from the International Monetary Fund and The World Bank Group spring meetings, including the keen interest in frontier markets. Learn More & Access Transcript: https://lnkd.in/ebaer4YG

PGIM Fixed Income

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2mo Edited

Watch Magdalena Polan, Head of Emerging Market Macroeconomic Research, share key takeaways from the International Monetary Fund and The World Bank Group spring meetings, including the keen interest in frontier markets. Learn More & Access Transcript: https://lnkd.in/ebaer4YG

Transcript

Last week I attended the IMF and the world Bank Spring Meetings in Washington, D.C., a semiannual gathering of policy makers and market participants from across the world. One of the key topics dominated discussion was the U.S. exceptionalism and geopolitical risks. But despite concerns about both high for longer U.S. rates, rising and uncertain geopolitical risk, there was a sense of maybe immunity of emerging markets to many of these risks. There are some positive aspects of that because emerging markets have developed, they��re not that very emerging anymore, and there's been a lot of reform and efforts to improve their fundamental variables, their policy frameworks, but also in a way, there's almost a sense of numbness of markets to these various risks. This may reflect the fact that there is a lot of uncertainty, and it's very difficult to price some of these risks. On the positive side. There was a lot of interest in frontier markets. So these are the markets that have either lower rating or lower income. There is a very strong perception that these markets have resolved a lot of their fundamental problems, especially with public debt and a lot of difficult debt. Restructuring cases are behind us and there is no obvious cases in front of us. There is also a lot of interest in individual country stories, offering a lot of uncorrelated alpha for investors. For the other markets, the more developed items. The story is very similar to what we would say for developed markets. The issues related to inflation. Possible inflation emergence later in this year, and then the increasing cautiousness of central banks and higher interest rates. Talking about debt restructuring. Many investors think that the process remains difficult. There has been lots of progress, especially the introduction of the common framework, but this remains a fairly complicated process that still needs improvement. Luckily, there is progress, and both the policymakers and the multilateral institutions, creditors and borrowers seem to come to some ideas for how to resolve and speed up the progess.

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PGIM Fixed Income’s Post

IMF Spring Meetings Takeaways: Potential Immunity of Geopolitical Risks in Emerging Markets

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