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By Ken Stibler, Noah Berman and Nojan Rostami. Executive editor: Dan Keeler

Africa

World Bank steps in to fill African FDI gap

World Bank economists said this week that sub-Saharan Africa’s economies would not grow fast enough to shrink poverty. While overall rates of poverty are decreasing slowly across the region, strong population growth means the total number of people living in extreme poverty is growing, the Bank says in its latest Africa’s Pulse report.

“Along with pockets of high poverty across the region, almost a third of the [world’s] extreme poor live in two countries—the Democratic Republic of Congo and Nigeria,” the report said. 

Amid a tepid global economic outlook many countries in Africa are in desperate need of financing to stabilize their economies and create the conditions for growth. But private financing is increasingly expensive or unavailable, leaving these countries with few options.

Against that backdrop, the World Bank is increasing its push into the continent. Low-interest loans and grants provided by the bank are becoming more important than ever to fund economic development and sustainable growth on the continent, World Bank African regional economist Andrew Dabalen said this week.

Zimbabwe’s new currency surprises skeptics

Zimbabwe’s new gold-backed currency (ZiG) began circulating on Monday and strengthened against the US dollar over the course of the week in a rebuke to economists who predicted its swift downfall. That marked a sharp turnaround from the performance of its predecessor currency, which lost value against the greenback every single trading day of this year. 

Before ZiG began trading, economists warned that Zimbabwe lacked the liquidity and import cover to support its new currency.

Zimbabwe is facing major economic headwinds. Inflation, a perennial problem, had more than doubled to 55.3% in March from its December rate, according to official statistics.

The investment environment is hindered by US sanctions on the country’s government and a $14 billion—about 66% of GDP—debt load, although the country has an abundant supply of critical minerals used in products such as electric vehicles. Last November, Zimbabwe announced that China and the UAE would invest $3.4 billion in projects including energy and mining complexes.

Asia

Vietnam sentences real estate tycoon to death for fraud

A court in Ho Chi Minh City sentenced the chairwoman of a Vietnamese real estate giant to death on Thursday for her role in the country’s largest-ever financial fraud case. 

Truong My Lan, founder of the property developer Van Thinh Phat Group, was accused of bribing government officials and embezzling $12 billion from Saigon Commercial Bank, a major Vietnamese lender.

Vietnam’s ruling Communist Party has been pushing hard to tackle corruption. Last month, then-president Vo Van Thuong resigned amid allegations of graft. Analysts said the increasingly visible scale of corruption could dim Vietnam’s economic outlook and make foreign investors uneasy as the country emerges as a major manufacturing hub, AP reports.

Thailand plans major economic reforms

Thailand is moving to boost its economic growth rate, which is among the most sluggish in Southeast Asia.The government unveiled major reforms to its property sector this week, including cuts to transaction and mortgage fees, and proposed a visa-free travel zone across the region, modeled on Europe’s Schengen area, to boost tourism.

Prime Minister Srettha Thavisin also announced a $14 billion cash handout to boost GDP. The country will send 10,000 baht ($275) to each of its citizens in the fourth quarter of this year, using a digital wallet platform, officials said.

The reforms are aimed at pushing Thai GDP growth up to 5%, Srettha said. The Thai economy grew at 2.6% in 2022, compared to 5.3% in Indonesia, 8% in Vietnam, and 8.7% in Malaysia.

Civil war weighs on Myanmar’s economy

Myanmar’s three-year civil war has created a dire economic crisis, marked by a shrinking middle class and surging poverty, a report released by the UN Development Program on Thursday said.

UNDP found that Myanmar’s middle class has decreased by 50% since the country’s military took power in a coup in February 2021. The UN survey, one of the largest since junta rule began, also found that poverty rates have doubled and that more than three-quarters of the population now lives below or near a “subsistence existence.” 

Matters could be made worse by the exodus of foreign firms, which before the coup injected billions into Myanmar’s economy. Chevron completed its departure from the country this week, two years after announcing that it would sell its 41% stake in Myanmar’s largest natural gas project. Firms from Australia, Malaysia, Norway and Qatar have all also divested from Myanmar since 2021.

Meanwhile, foreign companies that remain in Myanmar are taking losses. Japanese telecommunications firm KDDI said on Wednesday that its Myanmar subsidiary had recorded a $690 million loss, Nikkei reports.

Middle East

Iranian rial hits new low amid rising Middle East tensions

Iran’s rial sank to a new low against the US dollar this week, falling to over 660,000 rial/USD on the open market. The rial has been underperforming for years due to the weight of US sanctions, domestic economic weakness, and high inflation—with the annual inflation rate at nearly 50%.

This weekend’s attack by Tehran on Israel in response to the assassination of several high-ranking IRGC officials last week is expected to increase pressure on the currency.

As its domestic economic situation weakens, Iran is growing its trade with allies such as China and Russia. The Iranian Chamber of Commerce says non-oil trade with China exceeded $2.8 billion in the first quarter of this year, a 37% year-on-year increase. The central bank is moving to implement a monetary pact with Russia allowing for bilateral trade to be settled in rials.

Regionally, Iran’s trade with the Organization of Islamic Cooperation reached $61 billion in 2023, albeit with an 11% decline in export value and a 13% rise in imports, underscoring the weakness of Iran’s economy.

Continued gridlock anticipated after Kuwait elections

The opposition in Kuwait’s parliament has maintained its narrow grip on power, winning 29 of 50 seats in the legislature in the latest attempt at an electoral reshuffle, Al Jazeera reports. The election last week was the first held under the reign of Emir Sheikh Mishal al-Ahmad al-Sabah, who came to power after the abrupt death of his half-brother in December 2023.

The elections last week were called by the new emir in an attempt to push through economic reforms being blocked by the parliament, which the emir said was “harming the interests of the country and its people.” The result, though, is little different from multiple rounds of elections held over the years and legislative gridlock is expected to continue. 

Bahrain’s King pardons 1,500 prisoners

Bahrain’s King Hamad bin Isa Al Khalifa this week unconditionally pardoned some 1,500 prisoners in the largest amnesty in the country since the 2011 Arab Spring, The Guardian reports. The pardons, including for a number of political prisoners, reportedly came as a complete surprise to activists, who have been pushing for the release of political prisoners for years, and followed a series of riots that have substantially increased the cost of mass imprisonment. 

An official statement published by the Bahrain News Agency said government had promised to provide training programs and offer job opportunities to the pardoned prisoners.

Europe

Slovakia loses last pro-Ukrainian institution as pro-Russia Peter Pellegrini wins presidency

Last weekend’s victory by Peter Pellegrini in Slovakia’s presidential election, completes the country’s shift from strong NATO ally to Ukraine skeptic, ReportingDemocracy reports. Pellegrini defeated pro-Western former diplomat Ivan Korcok by a margin of 53% to 47% in the runoff, following a concerted smear campaign by his coalition that accused Korcok of wanting to bring down the government and send troops to fight in Ukraine. 

The election result has effectively removed the last check on populist Prime Minister Robert Fico’s power, as the incumbent President Zuzana Caputova was one of the few remaining pro-Western voices in Slovakia’s government. Opposition leaders worry that Fico will now be able to push through illiberal, anti-democratic legislation and skew foreign policy toward Russia.  

In his victory speech, Pellegrini echoed a ‘pro-peace’ line over the war in Ukraine often used by Fico and Hungarian Prime Minister Viktor Orban to justify Ukraine’s loss of sovereignty, occupation, and Russification. The election result could weaken EU unity on issues related to Ukraine and Russia.

Latin America 

Colombia backtracks on oil phase-out with pursuit of new Venezuela deals

President Gustavo Petro announced that Colombia is working on a deal to produce oil and natural gas in Venezuela, following his fifth meeting with President Nicolás Maduro since 2022, Bloomberg reports. Colombia’s pursuit of Venezuelan oil deals marks a departure from Petro’s widely publicized pledges to phase out fossil fuels and his government’s decision to decline exploration licenses to oil companies. 

Despite recent friction between the two countries, with Petro criticizing Maduro’s government for blocking key opposition leaders from Venezuela’s upcoming presidential election, the Colombian president remains optimistic about the economic benefits of the partnership. 

Petro expects Colombian exports to Venezuela to reach $1.2 billion this year, while imports will be between $200 million and $300 million. He also mentioned that a bilateral commission for food exports via Colombia’s Meta river will be operational soon. Additionally, Petro expressed Colombia’s willingness to mediate in Venezuela’s political conflict, following a meeting with opposition leaders during his visit to Caracas. 

El Salvador attempts a return to bond markets

El Salvador is preparing to sell its first international bonds in nearly four years, as the government seeks to capitalize on surging demand for riskier debt among investors. The Salvadoran government began reaching out to investors on Monday to pitch the US dollar-denominated notes, which offer payouts linked to the country’s economic growth.

The timing of the bond sale appears favorable, as El Salvador’s risk premium has decreased and the price of its 2029 notes has skyrocketed to around 90 cents from 40 cents last year, amid a surge in demand for frontier-market bonds.

• LatAm issuers caught between high US rates and slow GDP growth (Latin Finance)

El Salvador’s efforts to refinance short-term debt and mitigate default risk prompted ratings firm S&P to raise the country’s credit rating to B- from CCC+ in November 2022. However, the success of the impending bond sale will depend on investors’ appetite for riskier debt, as well as the government’s ability to manage its fiscal challenges and navigate ongoing discussions with the IMF regarding a potential funding package—a negotiation that was clouded by El Salvador’s 2021 decision to adopt bitcoin as legal tender.

Haiti finalizes political deal but prospects for peace remain dim 

Haiti’s political leaders have reached an agreement to establish a 22-month transitional government, aiming to restore order in the country’s gang-ridden capital and pave the way for presidential elections in February 2026, the Miami Herald Reports.

The accord, signed by a cross-section of political parties and civil society organizations, outlines the formation of a nine-member ruling council with significant power over the incoming government, including the authority to dismiss the next prime minister.

While the council’s priorities include constitutional reform and a path to elections, it lacks a credible path to address the rampant gang violence that has overtaken more than 80% of the capital, leading to the suspension of international flights and the shutdown of the main seaport. Critics argue that while the plan is ambitious, the government is unlikely to extract the country from its current crisis, which has left over a million people on the brink of famine, without external military support.

Global

Emerging Markets’ impact on the world economy is increasing, says IMF

Large emerging markets’ impact on the global economy has grown significantly over the past two decades as they become more integrated with global markets, generating larger economic “spillovers” to the rest of the world, according to the IMF’s annual World Economic Outlook.

However, faster growth among emerging markets can also lead to increased competition for firms overseas, particularly in sectors that are highly dependent on foreign suppliers, the multilateral warned. As the global economic power continues to shift, the IMF said effective multilateral cooperation and policy coordination amid a rapidly fragmenting world order is becoming more important. 

What We’re Reading

Ethiopia to allow some tax and forex changes to lure startups (Bloomberg)

Ethiopia faces tough devaluation decision to secure IMF bailout (Reuters)

Togo bans protests over a canceled presidential election as tensions rise (AP)

Russia Sends Instructors, Air Defense System to Niger (AFP via The Moscow Times)

Nigerian bank mergers loom after regulator’s rule change (Semafor)

Mali’s junta suspends political party activities until further notice (Reuters)

Guinea to deepen power cuts with energy sources depleted (Bloomberg)

Kenya lifts four-year freeze on issuing mining permits (Business Daily Africa)

Ugandan foreign exchange reserves drop 12% due to debt payments (The East African)

Tanzania woos Chinese tourists with a new documentary (Semafor)

South Africa’s bickering opposition fractures ahead of national vote (FT)

Western Sahara denounces France’s plan to fund projects in disputed region (Arab News)

Egypt’s gas shortage brings new risks after massive bailout (Bloomberg) 

UAE firm’s land deals in Africa raise fears about risks to indigenous livelihoods (AP)

Visa and Mastercard compete for share of Africa’s markets (Rest of World)

Pakistan’s finance minister leaves banker life behind to fix economy (Bloomberg)

Malaysia’s largest port to double capacity to chase Singapore (Nikkei)

Iran: Lufthansa suspends flights to Tehran (DW)

US envoy asked Middle East foreign ministers to mediate with Iran (Reuters)

UAE’s high stakes crypto bet poised for crucial test as Bitcoin rebounds (Al Monitor)

Iraq plans to reopen own oil pipeline as talks to restart Kurdish route stall (Al Monitor)

Turkey moves to restrict key exports to Israel (FT)

China and Russia pledge to work together to maintain ‘supply chain stability’ (FT)

Russia uses pay and perks to persuade people to move to occupied Ukraine (Radio Free Europe)

Russia strikes more Ukraine energy infrastructure (Radio Free Europe)

Kremlin warns worse to come as floods ravage Russia and Kazakhstan (Radio Free Europe)

Serbia upgrades air force through jet deal with France (Radio Free Europe)

Hungary, Serbia and Slovenia agree to integrate electricity exchanges (BalkanInsight)

Unlocking North Macedonia’s tourism potential (Radio Free Europe)

HSBC to take $1b hit on sale of Argentina unit (FT)

Ecuadorians wanted an action man. President Noboa has fulfilled that role (AP)

Ecuador is set to partially ease its fiscal crisis in 2024 (FrontierView)

Venezuela’s vanishing middle class is priced out of trendy neighborhoods (Bloomberg)

Colombia’s government begins to implement the health reform by decree (El Pais)

Record remittances provide lifeline in Central America (AFP via France24)

Panama Canal chokepoint approaching an end as the rainy season begins in May (Mercopress)

Peru launches fresh measures to boost economy (Bloomberg) 

Chinese green technologies are pouring into Latin America (The Economist)

Broad Reach hedge fund bets on treble of FMs (Bloomberg)

We are committed to providing FMN readers with a free weekly digest of politically unbiased, succinct and clear news and information from frontier and small emerging markets.

Please consider becoming a paid supporter to help cover some of our costs and support our continued development of sharp markets-focused coverage and new informational products. Paid subscribers will also gain exclusive access to our quarterly EM/FM report that aggregates EM insights from 25 major banks, international institutions and consultancies.