Part A: Emerging market

economy risks

Chart A.1 The United Kingdom is linked to EMEs through several channels

Sources: BIS Consolidated Banking Statistics, IMF Coordinated Portfolio Investment Survey and Direction of Trade Statistics and Bank calculations.

Topology of UK financial system exposures to EMEs

Chart A.2 UK banks have significant exposures to Asia

Sources: BIS Consolidated Banking Statistics, SNL Financial and Bank calculations.

(a)Foreign claims of domestically-owned banks on an ultimate risk basis, as at 2015 Q2. CET1 capital as at 2015 H1.(b)Some countries do not publish the full breakdown of EME exposures. Where exposures to China are not published, they are included in other emerging Asia. Where other exposures are not published, they are included in other emerging markets. Netherlands does not publish exposures to China. Sweden does not publish exposures to Latin America.

Banking system exposures to China, Hong Kong and other EMEs(a)(b)

Chart A.3 Credit gaps in EMEs have been rising as advanced economies have deleveraged

Sources: BIS Total credit statistics and Bank calculations.

(a)Raw data have been adjusted for breaks. (b)Credit to GDP gaps use a one-sided HP filter with a (BIS-consistent) smoothing parameter of 400,000. Credit by all creditors to domestic private non-financial sector.

Deviation of credit to GDP ratio from long-term trend(a)(b)

Chart A.4 Successive IMF forecasts of EME GDP growth have been revised down

Source: IMF World Economic Outlook.

IMF forecasts for growth in EMEs

Chart A.5 Net capital flows to EMEs fell in 2015

Sources: IMF World Economic Outlook (October 2015) and Bank calculations.

(a)Latin America comprises Brazil, Chile, Colombia, Mexico and Peru; Emerging Asia excluding China comprises India, Indonesia, Malaysia, Philippines and Thailand; Emerging Europe comprises Poland, Romania, Russia and Turkey.

Net capital flows to emerging market economies(a)

Chart A.6 EME-focused mutual funds have seen net outflows since August

Sources: EPFR Global and Bank calculations.

(a)From 17 September 2008.(b)From 22 May 2013.(c)From 12 August 2015.

Cumulative flows from EME equity and bond-focused mutual funds as per cent of assets under management

Chart A.7 Commodity exporters have seen particularly large exchange rate depreciations

Sources: JPMorgan Chase & Co., Thomson Reuters Datastream and Bank calculations.

(a)Between 31 December 2014 and 20 November 2015.(b)As defined in the IMF World Economic Outlook.

Change in sovereign bond spreads and currency depreciation in EMEs(a)

Chart A.8 Refinancing needs for maturing US dollar-denominated bonds increase in 2017 and 2018

Sources: Dealogic and Bank calculations.

(a)Sample includes non-financial companies in 30 EMEs.

Maturity profile of US dollar-denominated bonds issued by non-financial companies in selected EMEs(a)

Chart A.9 Many EMEs have high foreign exchange reserve balances relative to short-term external debts

Sources: IMF World Economic Outlook (October 2015) and Bank calculations.

(a)There are no data available for China, Indonesia and Mexico.

Ratio of short-term external debts to foreign exchange reserve assets