In emerging markets, there is generally expected some overshoot of official inflation targets. Still, it is expected there will be gradual further progress in the remaining relatively high-inflation emerging economies – Brazil, India, Turkey and Russia – with broadly sideways movement in the remaining countries.
Inflation expectations in emerging economies appear less stable and more susceptible to influence from currency depreciation, commodity price fluctuations and other factors. Moreover, some emerging market central banks enjoy less independence, at least formally, than their developed market counterparts.
A return to the very high-inflation past is not currently foreseen. In spite of disappointing growth and occasional political stress, very few emerging market governments have shown any sign of abandoning the broadly sustainable policies adopted in recent decades.
Michael Hood is global strategist, multi asset solutions at JP Morgan Asset Management
EXPERT VIEW
Giordano Lombardo, chief executive and group chief investment officer at Pioneer Investments, says: “Economies across the world, both in developed and emerging markets, are experiencing deep structural changes. While we expect growth and inflation to remain low, the global economy can avoid widespread stagnation as long as major economies continue to progress on structural reforms - which we view as the most likely scenario.”
KEY FIGURES
1.5%
UK annual inflation forecast for 2016
1%
US annual inflation forecast for 2016
0.7%
Japan annual inflation forecast for 2016
2.5%
China annual inflation forecast for 2016
Source: OECD
