While the forecast for emerging market and developing economies is one of gradually accelerating growth over the medium term1, these capital outflows are exposing vulnerabilities in some countries. Moreover, they are giving rise to currency weakness and, in turn, higher inflation across a number of emerging economies. South Africa has been no exception.
Global financial market volatility is being exacerbated by trade tensions between the US and various other large economies, in particular China. Increased tariffs, if they persist, threaten to reduce global trade volumes and disrupt complex supply chains. The recent rise in oil prices is a further challenge, driving up inflation and weighing on the trade balance of oil-importing countries.