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

Africa

Governance stagnation ‘threatens Africa’s development’

Progress toward democracy across the African continent has all but petered out over the past decade, according to the latest annual report from the Mo Ibrahim Foundation. “Overall governance progress came to a halt in 2022…as substantial advances in both human and economic development are undermined by the ongoing deterioration of the security and democratic landscape,” the report said.

Trends varied widely among different countries, though and more than half of the continent—33 of 54 countries—made progress overall, including Morocco, Côte d’Ivoire, Seychelles, Angola and Benin. Among the those where governance is significantly worse now than it was in 2014 are countries in crisis, such as Sudan, but also countries that rank highly for governance but are seeing persistent declines, including Mauritius, Botswana, Namibia and Tunisia. 

According to the study, 78% of Africans live in a country where safety and security have declined in the past decade. Overall, however, the continent made gains in health, infrastructure and women’s equality. On infrastructure and gender in particular, around 95% of Africa’s citizens live in a country where they’re far better off now than 10 years ago.

Mozambique’s ruling party wins election after controversial poll

Mozambique’s ruling Frelimo Party, which has held power in the Southeast African nation since its independence in 1975, was declared the winner of an election marred violence and accusations of fraud, the BBC reports. Frelimo’s Daniel Chapo secured 71% of the vote and will become the first president of Mozambique born after independence when he is sworn in in January. 

Venancio Mondlane, the opposition candidate backed by the Podemos party, came second with just 20% of the vote, pushing the former leading opposition party Renamo into third place.

Claims of voter manipulation and electoral fraud triggered violent protests around the country. EU election observers said the poll did not meet international standards, alleging there had been “irregularities during counting and unjustified alteration of election results.”

DRC constitutional reform plan draws ire

The President of the Democratic Republic of Congo, Félix Tshisekedi, is pushing for a change to the country’s constitution that could pave the way for him to run for the office a third time, Reuters reports. The current maximum is two five-year terms.

Opposition leaders vowed to block the move, calling it “inopportune,” and “a red line” that shouldn’t be crossed. Tshisekedi says the current constitution, last ammended in 2005, “does not align with Congolese realities.”

The DRC is currently suffering one of the world’s worst humanitarian crises, as more than seven million people have been internally displaced amid deepening violence between the country’s army and insurgents, including the rebel M23 movement. Heightening concerns about the simmering crisis, a UN peacekeeping mission in the region is withdrawing at Tshisekedi’s insistence. 

Asia

Pakistan asks IMF for $1bn in climate finance

Pakistan will formally ask the IMF for $1 billion to help it deal with problems related to climate change, finance minister Muhammad Aurangzeb told Reuters this week. Two years ago mass flooding caused an estimated $30 billion in damage, and unusually heavy monsoon rains this year are raising concerns of a repeat of that catastrophe.

The IMF funding would come from a mechanism intended to provide low-interest loans to low- and middle-income countries facing climate risk. Pakistan is also planning to sell up to $250 million in so-called panda bonds denominated in Chinese yuan.

Pakistan, which is seeking a credit enhancement from the China-led Asian Infrastructure Investment Bank, has never before directly tapped the Chinese markets. Last month, the IMF approved a $7 billion loan for the South Asian country, finalizing a deal that the two sides agreed to in July. 

Vietnam returns to power-sharing model with new president

Vietnam’s parliament officially selected a president on Monday, returning the country to a four-person power sharing model intended to prevent strongman rule. Luong Cuong, a former general in the Vietnamese army, became the country’s fourth president in less than two years.

His appointment put to rest fears that To Lam, the general-secretary of the Vietnamese Communist Party, would maintain his previous post as president and challenge the domestic balance of power, the New York Times reports.

Vietnam’s top decision-making body consists of the president, the general-secretary, the prime minister, and the leader of the National Assembly. The leaders will be shuffled—or reaffirmed—when the Communist Party hosts its next national congress in 2026.

Indonesia’s new president takes office

Prabowo Subianto was sworn in as president of Indonesia this week, cementing his transformation from military general accused of human rights abuses to leader of the world’s third-largest democracy, Reuters reports. Prabowo, who won election in February, vowed in his inauguration speech to tackle corruption and make Indonesia more self-sufficient, Al Jazeera reports.

After Prabowo announced his cabinet on Monday, analysts said they expected a broad continuation of the policies favored by outgoing president Joko Widodo, who oversaw major economic growth. One-third of the members of Prabowo’s cabinet were also in Jokowi’s, with an even larger percentage of officials staying on in the economy ministry, the Diplomat reports.

• Prabowo's economic policy eases deficit concerns (Nikkei)

In one of the new government’s first major moves, the foreign ministry announced on Thursday that Indonesia would formally apply to join BRICS, Bloomberg reports.

Middle East

Hedge funds drive rally in Lebanon’s dollar-bonds

Lebanon’s dollar-denominated sovereign bonds have rallied this month as distressed debt funds build positions to bet on a successful debt restructuring, the FT reports. Multiple series of the bonds, priced last month at around 6 cents on the dollar, have risen to the 8-to-10 cent range, reflecting investors’ growing belief that the recent defeats dealt to Hezbollah by Israel present the possibility of an agreement rolling back the group’s political influence, which could clear the way to an eventual return to normal capital markets.

Lebanon has been in default since 2020, when a balance of payments crisis, a severely devalued currency, unsound fiscal policy, and questionable central banking practices left it unable to make payments on dollar- and euro-denominated debts. The ongoing regional crisis and underlying weakness in Lebanon’s economy, which relies heavily on tourism, real estate and banking, have exacerbated the country’s challenges.

The bonds contain so-called Collective Action Clauses, which facilitate fast, more orderly bond exchanges from which holders of the defaulted bonds can profit, although the specifics of the arrangements remain obscure. 

Iranian President highlights politicization of BRICS grouping

At a summit of BRICS members this week in Kazan, Russia, Iran’s President Masoud Pezeshkian urged participants to speed up de-dollarization of trade and banking links to reduce the US’ sway over the global economy, Donyaye Eqtesad reports.

• At BRICS summit, South Africa hails the group as a “great success” (Daily Maverick)

• Egypt and Ethiopia agreed to strengthen ties with Russia at BRICS (AfricaNews, AfricaNews)

The BRICS group is reportedly developing non-dollar, non-US influenced trade and financial clearing systems to reduce the effectiveness of the West’s weapons of economic war. Russia and China have been pushing for BRICS to develop a coherent ideological bloc in opposition to the US and its allies. 

Key BRICS members such as Brazil, India and the UAE are reportedly concerned about the growing politicization of the bloc, which they prefer to view as just another option of many on the menu of trade and financial networks, as opposed to an explicit anti-US alternative order. Brazil this week rejected expanding membership to Venezuela, and Saudi Arabia, which has yet to accept an invitation to join BRICS and snubbed this week’s meeting. 

Europe

Moldova makes move toward EU in knife-edged vote

Moldovans last weekend voted in favor of joining the EU by a razor-thin margin of 50.46% despite allegedRussian interference. Although the vote enshrines EU membership as a constitutional goal, President Maia Sandu characterized the outcome as merely the "first battle in a difficult fight."

The vote was marred by claims of widespread interference, with Sandu alleging that criminal groups backed by hostile foreign forces attempted to buy 300,000 votes, Reuters reports. The EU, the US and the Organization for Security and Co-operation in Europe supported the allegations, pointing to "unprecedented intimidation and foreign interference by Russia and its proxies." The Kremlin dismissed the vote as "unfree" and challenged Sandu to present evidence of meddling.

Russia’s influence in the region is in the spotlight in Georgia, too, where the increasingly Russia- and China-friendly ruling party Georgian Dream claimed victory in parliamentary elections this weekend. According to an EU election monitoring group, the Georgian Dream campaign used “anti-Western and hostile rhetoric ... promoted Russian misinformation, manipulations, and conspiracy theories.” 

Latin America

Belize and Guatemala seek financing on quietly strong growth

Guatemala this week said it was considering issuing its first quetzal-denominated international bond next year as part of a $3.7 billion financing program, building on the success of its recent heavily oversubscribed $800 million sustainable bond. The country's stable macroeconomics, including 3.8% GDP growth and a debt-to-GDP ratio of around 30%, provide a strong foundation for the initiative, Latin Finance reports.

• Suriname will not consider loan offers against $26 billion oil patch (World Oil) 

Neighboring Belize, which saw 10.5% GDP growth in the first half of 2024 and record-low unemployment at 3%, is advancing on a parallel track, with finance minister Christopher Coye announcing the imminent closure of a World Bank loan to finance renewable energy projects. The funding, which will cover approximately half of a $60 million battery-storage initiative, complements an existing $77 million Saudi Fund for Development facility for solar energy.

Both nations are actively addressing infrastructure challenges to enhance their nearshoring appeal. Guatemala has launched its first public-private partnership for the Escuintla-Quetzal Port highway, while Belize is positioning itself as a "green nearshoring" destination and potential regional energy hub. Belize's economy has diversified significantly, with tourism surging 30% year-over-year and its business process outsourcing sector now representing 10% of employment. 

Argentina wins commodity cash

Argentina’s commodity sector is attracting new funding under President Javier Milei's market-friendly reforms, with major investments flowing into both copper and shale developments, the FT reports. BHP's recent $2.1 billion commitment to copper production in San Juan province and First Quantum Minerals' advancement of the $3.6 billion Taca Taca project could help Argentina become a top-10 global copper producer by the early 2030s, with six advanced projects potentially generating over $6 billion in annual exports.

At the same time, the Vaca Muerta shale formation is delivering on its long-promised potential, with oil output quadrupling to 369,000 barrels per day over the past five years and projections suggesting it will produce 1.1 million bpd by 2030, the FT reports. New pipeline infrastructure, including the country's first major export-dedicated pipeline, is easing production bottlenecks and enabling Argentina to target significant export growth.

• Argentina lands $8.8bn from multilaterals (Latin Finance) 

Investors remain concerned, however, about Argentina's persistent macroeconomic challenges, particularly its currency controls and triple-digit inflation. While Milei's government has introduced investment incentives and promises of economic liberalization, major players including Chevron and mining sector analysts stress that full removal of capital controls and achievement of macroeconomic stability are prerequisites for the larger-scale investments needed. 

Cuban grid repeatedly collapses as economic system struggles

Cuba's national electrical grid has suffered four catastrophic failures in five days, leaving its 10 million citizens largely without power and prompting President Miguel Díaz-Canel to cancel his attendance at the BRICS summit in Russia. The crisis, triggered by the failure of the island's largest power plant and exacerbated by fuel shortages, has forced the government to temporarily close schools and non-essential businesses, while small protests have erupted across the country.

The blackouts come as the Communist-run nation grapples with severely reduced fuel deliveries from key allies. Venezuela has cut subsidized shipments by half this year, while both Russia and Mexico have decreased deliveries to the island forcing Cuba to seek more expensive fuel on the spot market.

The crisis represents Cuba's most significant challenge since the 1991 collapse of the Soviet Union, according to analysts. While the government blames US sanctions for complicating fuel purchases and spare parts acquisition, it also faces fundamental infrastructure challenges, with its Soviet-era power plants being both obsolete and poorly maintained.

Global

Traditional manufacturing development model fails for emerging markets

Stagnating global exports and growing automation are undermining the export-led manufacturing model that lifted hundreds of millions out of poverty in recent decades, Bloomberg Economics reports. Nearly three-quarters of developing economies, representing $25 trillion in output, are unlikely to benefit further from export-oriented manufacturing, as global exports have stagnated at around 29% of GDP since 2007, the Bloomberg analysis found. 

The headwinds facing emerging markets are formidable and diverse. Ethiopia's promising trajectory was derailed by civil strife and unsustainable Chinese-funded infrastructure projects, while rising global interest rates have pushed public debt in emerging nations to $29 trillion, up from $12 trillion a decade ago. Increased US-China tensions have triggered protectionist policies worldwide, with governments implementing more than 2,500 restrictive trade measures last year, triple the number from five years ago.

Romania offers a potential alternative development model, having transformed from Europe's second-poorest nation to outperforming several EU peers through a diversified approach combining manufacturing, agriculture, and services. The country's success stems from leveraging advantages including skilled labor, competitive taxation, and a substantial domestic market. However, experts warn that replicating such growth elsewhere will be challenging, particularly as the most lucrative service sector jobs require skills scarce in many developing nations. 

Investors increase interest in EM-ex-China funds 

Emerging market funds that exclude China are experiencing a surge in popularity, with assets under management growing 75% this year to more than $26 billion, despite recent rallies in Chinese equities, reports the Financial Times. Franklin Templeton's latest launch of an "ex-China" vehicle reflects a broader industry trend, as the number of such funds has nearly doubled to 70 in the past two years, attracting $10 billion in net inflows in 2024—surpassing investments into traditional emerging market funds.

The shift represents one of the most significant changes in emerging markets investing in decades, driven by concerns over China's outsized influence in traditional EM indices and growing geopolitical tensions with the West. Despite China's weighting in the MSCI emerging market index falling from a pandemic peak of 40% to around 25%, investors increasingly view the world's second-largest economy as too large or risky to manage alongside other developing markets like India and Taiwan.

What We’re Reading 

Africa 

Nigeria’s president reshuffles his cabinet during the worst cost-of-living crisis in a generation (AP)

Côte d’Ivoire bonds may narrow gap to South Africa’s on rating (Moneyweb)

Ghana’s parliament suspends hearings indefinitely over party vacuum (BBC) 

Turkey eyes Niger mining projects amid competition for uranium (Bloomberg)

Global investors look past turmoil to boost Kenya asset bets (Bloomberg)

Zambia pursues deals with investors to develop mining permits (Bloomberg)

Zimbabwe’s gold-backed currency loses half its value: Why and what’s next? (Al Jazeera)

Angola banks on Biden boost to fuel growth and reduce debt (The Africa Report)

JPMorgan expects South Africa IPO surge on economic optimism (Bloomberg)

France’s Macron to visit Morocco after years of tense relations (Le Monde)

WHO certifies Egypt as malaria-free (WHO)

African markets expand at fastest pace since 2017, Absa finds (Bloomberg)

Asia

Bangladesh bans student wing of ousted PM Hasina’s party after it demands interim president’s resignation (Dhaka Tribune)

Laos pins hopes on gold trading as economy falters: Government sets up bullion bank to shore up currency reserves. (Nikkei)

Armed group says it takes control of Myanmar rare earth mining hub (Reuters)

China to offer Afghanistan tariff-free trade as it inches closer to isolated resource-rich regime (Reuters)

Thai car production falls by a quarter as sales slump across Southeast Asia (Nikkei)

Middle East

Oman’s OQ tees up follow-on offering after successful initial $2.0 billion IPO (Bloomberg)

Kuwait signs $1.3bn in contracts on upgrading and maintaining country’s roads (Reuters)

Kuwait Finance House sells 18.18% stake in Sharjah Islamic Bank (Zawya)

Iraq signs gas supply agreement with Turkmenistan (Offshore Technology)

Iranian markets slide and flights cancelled as Israeli attack looms (FT)

Europe

Slovenia cancels referendum on new nuclear plant (Reuters)

Serbia hints at new long-term deal on Russian gas (BalkanInsight)

Hungary’s growth plan ‘highlights policy trade-offs and risks’ (Fitch Ratings)

Latin America

Argentina’s economy minister strikes defiant note on default risk (FT)

Citizens of Ecuador, Costa Rica, Chile and Uruguay warm to 'iron fist' policies to fight insecurity (Mercopress)

Uruguay election frontrunner Yamandu Orsi pledges a 'modern left' (Reuters)

Mexico aims for food self-sufficiency (AP)

Brazil should join China’s Belt and Road Initiative, agriculture chief says (Bloomberg)

Global

Plunging rice prices ease inflationary pressures in Asia and Africa (Nikkei)

Inter-American Development Bank offloads risk on $1bn of loans (FT)

Cash shortage could follow poor nations' default wave (Reuters)

World economy fault lines shift from prices to politics and debt (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.