📝 EM Current Account Balances to Improve Into 2024: ING Strategy

Expect some improvement in the wide current account deficits seen in 2022 for many commodity importers. Hungary stands out in likely seeing a significant narrowing in its current account deficit, given its sensitivity to gas prices. The IMF also forecasts improvements in Namibia and Senegal in Africa, along with the Bahamas, Chile and El Salvador in Latin America.

EM economies are set to significantly outperform DM in terms of relative growth in the coming two years, led in particular by robust momentum in EM Asia (Indonesia and the Philippines are well placed). Pressure on the external accounts of commodity importers has started to ease (benefiting Hungary and the dollar bonds of the CEE region in general), while some energy exporters have taken the opportunity to implement structural reforms (evidenced by credit rating improvements in Saudi Arabia and Oman). With credit spreads still elevated on the back of recent banking system concerns and rates volatility, there should be plenty of areas of selective value to be had within EM credit markets. - ING Strategy