Tag Archives: Emerging Markets

Credit spillovers from Eur banks to EM

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Makes sense.

I always wondered how that loan demand was accommodated.
Never looked like the kind of lending US regulators would sanction.


Karim writes:

Interesting table from JPM.
Much larger dependence on credit from Eur banks for LATAM economies than from U.S. banks.
Poland/Russia not as surprising but still large!
Overall, domestic bank lending surveys in EM have also been moving towards a net tightening of lending standards.

Could be more severe credit contraction in those economies as a result of ongoing strains in Europe.

Euro area and US bank claims on EM
As of 2Q11
EUR Banks
US Banks
$ bn
% of dom cred
$ bn
% of dom cred
EM
1980.7
12.4
811.3
5.1
EM Asia
406.7
3.2
472.0
3.8
China
90.6
1.0
81.7
0.9
Korea
68.4
6.3
95.1
8.8
Latam
618.1
38.7
248.5
15.6
Brazil
285.0
23.1
97.6
7.9
Russia
113.5
16.1
23.8
3.4
Poland
249.0
95.6
14.4
5.5


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Mexican Remittances Fall

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Trickle down economics not working so well:

Mexican Remittances Fell Most on Record in October

Dec. 1 (Bloomberg) — Mexican remittances dropped the most on record in October as the impact of the U.S. economic slump continued to spur job losses and sap savings for nationals living north of the border.

Money sent from workers living outside Mexico fell 36percent to $1.7 billion in October from $2.6 billion in the same month a year earlier, the central bank said on its Web site. The largest previous drop was a decline of 20 percent in May.

Remittances data compared with the prior year will remain negative until at least March as immigrants are having trouble replacing diminishing savings with new income because they’re unemployed, said Manuel Orozco, senior associate and director of remittances at the Inter-American Dialogue in Washington.

“If savings drop over time and they don’t find jobs, then the remittance capacity will drop,” Orozco said in a telephone interview.

Falling remittances won’t have a negative impact on Mexican consumer demand because money transfers have increased 8.5 percent so far in 2009 compared with last year due to depreciation of the peso, Gabriel Casillas, chief economist at JPMorgan Chase & Co. in Mexico City, wrote in a report today.


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