Emerging countries: Mainly clear skies but some patchy cloud

Growth in emerging-market countries accelerated in the first half of 2017, particularly in Central Europe and Turkey, which is the only region seeing a resurgence in inflation. However, for Turkey, unlike the other countries, that does not represent a catch-up effect but reflects an economy growing above potential and a fragile currency. India is the only emerging country where growth is disappointing, because of weak private-sector investment and a negative contribution of net external trade.

Growth across all emerging countries could weaken slightly in the second half, in line with the slowdown in foreign trade, although the positive trend looks robust.

In the last few months, the main developments in the global environment have been the decline in oil prices and the contrasting rise in metals prices, along with the weak dollar, which is positive for emerging markets. The contrast between oil and metals prices is due to significant upward revisions of oil supply. As a result, the expected upturn in growth in oil-producing countries in Africa and the Middle East remains highly uncertain, particularly for Saudi Arabia.

In terms of domestic demand, bank credit has either made a greater contribution to growth, or has stopped dragging it down, since the start of the year in most countries. China finds itself somewhere in the middle: credit growth to households and corporates has been stable since the beginning of the year. However, the growth of bank's claims to non-bank financial institutions (shadow banking) has decelerated markedly which is good news for financial stability, although the price is slower growth