Javier Guzmán Calafell: The task for emerging markets

Remarks by Mr Javier Guzmán Calafell, Deputy Governor of the Bank of Mexico, at the session "The task for emerging markets", Reinventing Bretton Woods Committee-UBS International Global Macro Seminar "Managing the soft landing of the global economy", Washington DC, 12 April 2019.

The views expressed in this speech are those of the speaker and not the view of the BIS.

I thank the organizers for the kind invitation to participate in this panel.

The deceleration of world economic activity that we have seen during the last years has encompassed both advanced and emerging market economies. However, when we look at projections by the main international institutions both for the short and the long terms, hopes for a recovery from the current weakness fall disproportionately on the shoulders of the emerging market economies (EMEs). For instance, according to the most recent projections by the IMF, the upturn of global growth in 2020 depends entirely on higher growth rates in these countries, and projections for the long term do not show a much different picture. In fact, according to the Fund, emerging markets and developing economies' share in global growth will increase from around 76 percent this year to 85 percent in 2024.

With this as a background, it is obviously important to identify possible roadblocks ahead, not only for the benefit of EMEs themselves, but in the interest of world economic activity. In general, the external environment faced by EMEs at present is quite challenging, and the situation is unlikely to change much in coming years. However, I would like to focus on two issues which, in my view, are of special importance at this stage. The first is related to the implications, from a medium- to long-term perspective, of the potential for a more gradual normalization of monetary policy in the advanced economies (AEs). The second focuses on the consequences of the recent protectionist trends for global value chains, and the resulting repercussions on EMEs.