Asian Supply Chains: Slow Motion Shake Up | Politics and the Energy Transition | EM Monthly | Economists in the News | US Housing: No Quick Fix

Welcome to the latest edition of Essential Economics! We kick off this week with Asia Pacific Chief Economist Louis Kuijs weighing in on the region’s supply chains, finding that the headlines might be overstating the extent of realignment. A Ratings cross-sector team including Head of Climate Economics Marion Amiot finds that governments are not abandoning energy transition targets, but political priorities are coming under pressure. Our latest emerging markets (EMs) monthly is out, with Lucca Rossi, Valerijs Rezvijs and team arguing that earlier rate cuts by the Fed create a window for monetary policy easing in EMs. US Chief Economist Satyam Panday and Asia Pacific Economist Vishrut Rana hit the airways during August to talk about Fed policy rates and inflation, and our view on Southeast Asia. A Ratings Sustainability Insights team looked at US housing and concluded that a median priced home is now unaffordable for a median income household. Finally, I preview my upcoming trip to Asia.

Asia Supply Chains: Slow Motion Shake-Up

Louis writes that geopolitical friction, trade barriers, and industrial policy are challenging Asia's dominant supply chains; however, our analysis shows the supposed shake-up is far less than headlines would suggest. China's share in global exports has held up even though it has declined in the U.S. Other Asian emerging markets and Mexico have made modest gains.

We think China's role in global exports won't diminish drastically and most other Asian EMs won't be major net winners of relocation from China.

To read the full report, click here .

Political Priorities and the Energy Transition

Ludwig, Christian and Marion argue that governments are not abandoning energy transition targets, but political priorities are coming under pressure. Against the background of tighter fiscal constraints and a worsening geopolitical landscape, policymakers across the world increasingly focus on cost of living, energy security, economic competitiveness, and defense spending.

Distributional questions are increasingly being raised in connection with the energy transition.

?To read the full report, click here .

Emerging Markets Monthly: More Space for Monetary Easing

Luca, Valerijs and team report that our revised US Fed view of a 25 basis point cut in September provides central banks in emerging markets (EM) more room to ease rates. Financing conditions remain?benign for bond issuance, which is particularly the case in the unrated spectrum. Buoyed by tight spreads and refinancing needs, EM corporates have issued debt at a longer tenor, with respect to 2023.

Geopolitical risks and softer global economic activity outlook may create grounds for future market volatility ahead.

To access the chart pack, click here .

Economists in the News

Satyam and Vishrut were in the media throughout August. Satyam spoke with Yahoo Finance, BBC News and the Schwab Network on the outlook for rate cuts by the Federal Reserve and his take on the latest inflation data. Vishrut stopped by the CNBC studios in Singapore to discuss our Southeast Asia macro view.

Watch Satyam’ interviews on Yahoo Finance , BBC World News and the Schwab Network .

US Housing: No Quick Fix

A Ratings Sustainability Insights team looks at how access to affordable housing has changed, especially since COVID-19, and examines the role of affordable housing in improving socioeconomic outcomes and the credit implications for the entities we rate.

Due to high mortgage interest rates and persistently high real estate prices, a median priced home is now unaffordable for a median income American household. Conditions are most acute for households in highly populated areas and earning less than the U.S. median income.

Demand for assistance from U.S. affordable housing issuers has risen, leading to a 32% year-to-date increase in debt issuance over 2023 highs. ?At some point, not-for-profit housing issuers, particularly multifamily lenders, may struggle to preserve credit quality by deploying reserves to meet affordable housing needs.

To read the full report, click here .

My Upcoming Asia Trip

Looking forward to my upcoming trip to Asia. Next week I’m in Hong Kong, presenting at the ABS Asia 2024 conference. The following week I’m in Singapore to attend and present at S&P Global Commodity Insight’s flagship APPEC conference . In both cities I plan to meet clients, colleagues, government officials and the media.

I plan to share the main takeaways from my APAC trip in future editions of Essential Economics.

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As always, you can find the latest research from the S&P Global Ratings Economics team here .