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Markets Update: How Emerging-Market Economies are Navigating a Recovery

2020-09-25

Jennifer Roth of Goldman Sachs’ Global Markets Division talks about how emerging-market economies are trying to steer their way toward a recovery, and how investors are responding to those efforts.

This is an unofficial transcript meant for reference. Accuracy is not guaranteed.
Welcome to our exchanges. Goldman Sachs markets up need for Friday September, twenty fifth, each week check on the leader across the firm to get a quick take on what they're watching in markets objects the global of corporate communications heard the fun join Today we have a frequent the problem, Jan Roth, who heads emerging markets, international sales in global markets, division Jen, welcome back to the programme Jake. It's great to see you as always what sort of China. China is always looms large. When we talk about these markets, the kindly there's rebounding pretty quickly alike, cook at the mini expected after the pandemic and a lot faster, the most developed economies what's driving the growth there and what the outlook is locked up. Ricky reasons by China's economy is really rebounded a lot more quickly from the pandemic. The biggest reason simply that China was left relatively unscathed, given at a much lower carbon caseload early on and were much more and shutting down their economy is allowed to rest
their economy, a lot more quickly, which is reflected very fairly. In the recent strong data prince, we ve seen In addition, they have the ability to implement fiscal stimulus directly and effective way through infrastructure build doubt. Finally, the world's recovered a lot more quickly than the dire forecasts a few months ago, which is really benefited. China's export sector. beyond China. Some of the other emerging market economies are generally lagging behind the developed nations. Why's. That talk I mean the impact of carbon, has been much more significant from a health perspective than most other countries. There has been an There continues to be a much larger case ought, in places like Brazil, India, Mexico, Indonesia, just name a few, which is really hamper. The government's ability to reopen our economies is quickly and rapidly. As China has said, Lead times we find when there is an emerging market crisis that these countries have you policy lovers, they can pull together economies going back again, blame the dynamic and how we see that play out during the pandemic here you're doing
that's absolutely right and more guards DM countries having a more limited, took it and develop market countries. Are we an interesting phenomenon. This particular crisis compared to previous crises with em central banks, really allowing our currencies to depreciate and use monetary policy to stimulate the economy. The question really is: gonna, be another watching closely at this policy mix, don't again poorly with many these countries experiencing large fiscal crises and increase political unrest. as you mentioned, the one of them are using fiscal stimulus, which means there piling on debt. What are the implications for that running up the item in the? U S and Japan can do something like that, with almost no pain, They said the moment, but what happens in any country. That's a little leverage, look I mean really bored will probably going to see a lot more downgrading the rating agencies. This will raise binding caught in these countries and have a material impact on growth, which really could become a vicious cycle, but Saint Brazil. As an example, your people Spending has increased in debt to GDP as close to eighty five percent, even postcode battle,
really hard to robust, which was meant to be temporary spending and will really race? questions about their long term debt sustainability. Is that what you're saying from plans has the emerging markets investment? These has been fundamentally changed by the pandemic or This just the sort of pause welcoming, even though we discuss somebody concerns round the amber really is the view that we could be in the present case, I'm an incredibly friendly macro environment. Pretty amass ends once we get past the macro volatility of the next six to eight weeks, uber market, that's flushed with central bank provided liquidity. and you have the potential premature or pick up and growth into twenty twenty one and given Domini place in the World Bank with yelled yams really benefit, even though fundamentally some of these countries won't really look a solid. We like him action. Way to play on this theme and select young high building credit, but your story. right. We do think the next day we shall be buried Bobby from markets perspective and price action,
with all the dynamics you described in our clients sitting still or is there a lot of activity and markets right now? Our clients repositioning We have a lot of macro risk over the next six to eight weeks of the: U S election, where there's a lot of uncertainty around that, we also have the potential for some back see related New south. Because of that, a lot of our investors rapture staying pretty close to home button for better opportunities to get involved. The waiting for some of this file today to subside before they get a lot more active in the market or I can always interesting here. You perspective thanks for joining us today, great you beer and always thanks so much Jake. That's all for this weeks markets update unobtrusive Goldman Sachs in case you missed. It check First many series which came out earlier this week, exchanges deep down the battle first, greens is a four part, looked at the future of entertainment, social media and tat person. Thank you for this. I hope everyone has a great began. His podcast was recorded
Wednesday in September twenty third, two thousand twenty all price references and market forecasts correspond to the date of this recording this pod cash should not be copied, distributed, published or reproduced in whole or in part. The information contained in this package does not constitute research or recommendation from any Goldman Sachs.
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Transcript generated on 2021-07-01.