Emerging Markets and the Prospects of Deflation

Turkey’s on-going financial crisis was expected by Elliott Wave International’s Global Market Perspective more than a year in advance.

The May 2017 issue said:

[Turkey’s] sovereign bond yields are north of 10%, depicting a country that is at risk of a new credit crisis.

On Aug. 24, a article titled “Emerging Markets: Deflation Threatens” says a crisis may be brewing for other nations as well:

The outlook for emerging markets appears to be dimming. While Turkey’s troubles are well-known, widespread weakness in EM currencies is rattling the markets. EM equities are flirting with a bear market and metals prices have dropped sharply, with the latter hurting EM economies in particular. The worries over EM stocks are now seeping into Eurozone banks, where fears for lending losses are rising. One research analyst sums it up this way, saying “The combination of stronger currencies, lower commodity prices, and potentially weaker bank credit creation is a disinflationary headwind for developed markets in the near term”.

Regarding Turkey, an Aug. 27 Forbes article provides an update:

So far in 2018, the Turkish Lira depreciated close to 40% against the U.S. dollar. Inflation has topped 16%, and investors are concerned that interest rates are being held down through President Erdogan’s intimidation of the central bank.

Elliott Wave International anticipates that deflation will eventually extend beyond just emerging markets.

You are encouraged to prepare with the free report, “What You Need to Know NOW About Protecting Yourself from Deflation.”

Previous post:

Next post: