The Potential Impact of Ukraine-Russian Crisis - BBVA Research
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The Potential Impact of Ukraine-Russian Crisis - BBVA Research

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Market impact so far limited and confined to the EM Europe region. ...

Market impact so far limited and confined to the EM Europe region.

Europe is dependent on Russian Energy… but Russia needs Europe (constraint).

Ukraine bank links with Europe are not specially high.

Spill overs to the Russian Banking system could also spark into the EM Europe banking systems. The dependency model could facilitate the impact to the European banks (Austria, Germany, Italy).

Uncertainty about potential scenarios is still high but there is no economic incentives for Russia for a crisis spiral.

There are several transmission channels of the crisis. The trade & energy channel is relatively benign. We would need to enter into Global Risk Aversion and Russian Meltdown to really feel the pain.

EM Europe has particular risks among the Emerging Markets vulnerability. The Currency Mismatch (FX denominated loans) problem poses special risks to the region.

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    The Potential Impact of Ukraine-Russian Crisis - BBVA Research The Potential Impact of Ukraine-Russian Crisis - BBVA Research Presentation Transcript

    • Navigating through the Uncertainty: The Potential Impact of Ukraine-Russian Crisis BBVA Research March 2014
    • 2 Key Takeways  Market impact so far limited and confined to the EM Europe region  Europe is dependent on Russian Energy… but Russia needs Europe (constraint)  Ukraine bank links with Europe are not specially high.  Spill overs to the Russian Banking system could also spark into the EM Europe banking systems. The dependency model could facilitate the impact to the European banks (Austria, Germany, Italy)  Uncertainty about potential scenarios is still high but there is no economic incentives for Russia for a crisis spiral  There are several transmission channels of the crisis. The trade & energy channel is relatively benign. We would need to enter into Global Risk Aversion and Russian Meltdown to really feel the pain  EM Europe has particular risks among the Emerging Markets vulnerability. The Currency Mismatch (FX denominated loans) problem poses special risks to the region
    • 3 Index 1. The Market Reaction to the crisis 2. The Energy Dependence Issue 3. The Bank Interconecction 4. Transmission Channels and Potential Impact 5. Vulnerabilities in EM and Eastern Europe
    • 4 EMBI Global spread (change since Feb 4, bps) Source: Haver and BBVA Research Equity markets (change since Feb 21, bps) Source: Bloomberg and BBVA Research Market synchrony to the event cannot be called yet contagion but there is enormous room to the downside… FX vs. USD Porcentual change since Feb 21) Source: BBVA Research and Bloomberg -5 -3 -1 1 3 China Hong Kong Philippines Taiwan Thailand Korea Malaysia India Indonesia Chile #N/A Argentina Venezuela Peru Mexico Turkey Ukraine Russia Poland Bulgaria Czech Republic Hungary Romania ADXY - Asia LACI - Latam Japan Euro GBP Dollar (DXY) USD appreciation -10 -5 0 5 10 Shangai Comp Malaysia HK - Hang Seng Indonesia Korea Taiwan Thailand India Argentina Peru Mexico Brazil Venezuela Chile Colombia Turkey Russia Czech Republic Hungary Romania Poland Ukraine Germany DAX Euro Stoxx 50 Euro Stoxx 600 France CAC Spain IBEX Italy MIB Ireland Portugal PSI Greece ASE Japan Nikkei US DJIA US S&P US NASDAQ -10.9% +31.9% -100 -50 0 50 100 Chile Colombia Peru Mexico Brazil Venezuela Argentina Embi Ukraine Russia Poland Hungary Romania Turkey china India Indonesia -127 -121 Ukraine-Russia crisis “Spill Overs” still muted and highly concentrated in EM Europe…
    • 5 Banks CDSs (change since 23 Feb) Source:Bloomberg, DataStream & BBVA Some Russian and Western European Banks already affected but mildly.. -10 0 10 20 30 40 50 60 Gazprombank RussianAgriculturalBank VTBBank Vnesheconombank Raiffeinsen Sberbank Santander SocietéGenerale BNPParibas iTraxxSen BBVA iTraxxSub UniCredit
    • 6 Commodities : Food Prices (normalized as Jan2014=100) Source Bloomberg and BBVA Research So far, food and gold prices increases higher than energy… Commodities : Energy Prices (normalized as Jan2014=100) Source Bloomberg and BBVA Research 90 95 100 105 110 115 Yanukovich ousted Gold Corn Wheat 80 85 90 95 100 105 Yanukovich ousted Natural Gas Brent
    • 7 Equity implied volatility Source:Bloomberg & BBVA Research through EPFR data 10 15 20 25 30 35 40 10 15 20 25 30 35 40 Eurostox50 implied volatility (v2X) S&P500 implied volatility (VIX) EM ETFvolatility Global Risk Aversion has reacted somehow… but at different levels …
    • 8 ### ### ### 0.50 1.20 3.00 Strong Capital Outlows (between -1 % and -2 %) Moderate Capital Outflows (between 0 and -1 %) Moderate Capital Inflows (between 0 and 1 %) Strong Capital Inflows (between 1 % and 2 %) Booming Capital Inflows (greater than 2 %) Sharp Capital Outflows (below -2 %) Singapore Idio. Factors behind Jan-Feb 14 (country Flows over Total Assets, average) Source: BBVA Research through EPFR BBVA Country Portfolio Flows Map (Country Flows over total Assets ) Source: BBVA Research through EPFR data USA # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # Japan # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # Canada # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # UK # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # Sweeden # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # Norway # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # Denmark # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # Finland # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # Germany # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # Austria # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # Netherlands # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # France # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # Belgium # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # Italy # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # Spain # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # Ireland # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # Portugal # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # Greece # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # Poland # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # Czech Rep # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # Hungary # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # Turkey # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # Russia # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # Mexico # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # Brazil # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # Chile # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # Colombia # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # PeruPeru # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # Argentina # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # China # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # IndiaIndia # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # Korea # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # Thailand # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # Indonesia # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # Philippines # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # Hong Kong # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # Singapore # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # 2012 2013 2014 G4WesternEuropeEMEurLATAMAsia 2008 2009 2010 2011 -2.0 0.0 2.0 4.0 USA Japan Canada UK Sweeden Norway Denmark Finland Germany Austria Netherlands France Belgium Italy Spain Ireland Portugal Greece Poland Czech Rep Hungary Turkey Russia Mexico Brazil Chile Colombia Peru Argentina China India Korea Thailand Indonesia Philippines Hong Kong Singapore -2.0 0.0 2.0 4.0 USA Japan Canada UK Sweeden Norway Denmark Finland Germany Austria Netherlands France Belgium Italy Spain Ireland Portugal Greece Poland Czech Rep Hungary Turkey Russia Mexico Brazil Chile Colombia Peru Argentina China India Korea Thailand Indonesia Philippines Hong Kong Singapore Portfolio Flows Jan-Feb 14 (country Flows over Total Assets, average) Source: BBVA Research through EPFR No serious regional capital flows reversals… Idiosincratic Factors playing a higher role now than before…
    • 9 Index 1. The Market Reaction to the crisis 2. The Energy Dependence Issue 3. The Bank Interconecction 4. Transmission Channels and Potential Impact 5. Vulnerabilities in EM and Eastern Europe
    • 10 Europe depends on Russian Gas…but Russia has something to loose in the crisis… Russia has more stake to loose than Europe in that case as 61% of total Russian oil exports flow into Europe but Europe relies only partially on Russia (30%) EU Natural Gas Imports Source Europe’s Energy Security:Options and Challenges to Natural Gas Supply Diversification
    • 11 Russia has more stake to loose than Europe in that case as 61% of total Russian oil exports flow into Europe but Europe relies only partially on Russia (30%) North Stream South Stream Nabucco & Others A big part of the Gas is flowing through Ukraine but there arealso alternative routes for Russian Gas …
    • 12 EU Energy Depedence of Russian Gas* Source Europe’s Energy Security:Options and Challenges toNatural Gas Supply Diversification World Russian Gas Dependence Source Eurostat BP Baltics and Emerging Europe would be the most affected… but central europe would feel some pain…
    • 13 Index 1. The Market Reaction to the crisis 2. The Energy Dependence Issue 3. The Bank Interconecction 4. Transmission Channels and Potential Impact 5. Vulnerabilities in EM and Eastern Europe
    • 14 Issuer/Borrower EUR USA UK JAP Systemic Relevance* EUR 60% 10% 7% 6% 44% SWISS 43% 9% 13% 4% 2% UK 52% 17% 6% 10% USA 57% 18% 20% 27% CAN 32% 22% 18% 11% 2% JAP 31% 29% 9% 4% O.DEV 49% 7% 16% 16% 19% China 32% 8% 19% 7% 3% POL 86% 6% 4% 2% 1% RUSS 73% 13% 6% 1% TURK 72% 11% 4% 1% UKR 89% 6% 0% (*as % over Total foreign claims) 0.62% 0.00%0.17% 0.07% 0.00% 0.10% 0.06% 0.01% 0.06% 0.00% 0.05% 0.03% 0.11% Russia: Borrowing Structure and Systemic Relevance* Source: BIS, (*) calc as % of total world liabilities IIP Relative Matrix: Share of Liabilities by issuer and borrower -% of the liabilities issued Source: BIS Table 9B: Consolidated foreign claims of reporting banks - immediate borrower basis The crisis can shift the focus to West Europe Banks links with the region and their particular “banking” model…
    • 15 Market Share of Foreign Banks in Central Eastern Europe (% total assets) Source:Raiffeisen Market Share of Foreign Banks in CIS countries (% total assets) Source:Raiffeisen The crisis can shift the focus to West Europe Banks links with the region and their particular “banking” model US and West European Banks
    • 16 42% 54% 11% 18% 8% 12% 40% 17% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% 2008 sep-13 Non-fussian foreign bank Russian Bnaks Privately-onwed Ukrainian Bank State-owned banks 0,0 0,5 1,0 1,5 2,0 2,5 3,0 3,5 4,0 4,5 5,0 Raiffeisen Sberbank VEB Unicredit BNPParibas OTP VTBBank Austria Russia Russia Italy France Hungary Russia Market structure of Ukraine's banking sector Source: Raiffeissen, SNL and each bank Direct exposure of foreign banks to Ukraine (€bn) Source: Raiffeissen, SNL and each bank But Russian Banks will be affected too…
    • 17 0,0% 1,0% 2,0% 3,0% 4,0% 5,0% 6,0% OTP VEB Raiffeisen Sberbank Unicredit VTBBank BNPParibas Hungary Russia Austria Russia Italy Russia France Bank exposure to Ukraine (as % of 2012 total asset of each bank) Source: Raiffeissen, SNL and each bank But Russian Banks will be affected too… 4.5 bn 2.0 bn 0.5 bn 3.0 bn 2.3 bn 3.0 bn 2.1 bn
    • 18 Index 1. The Market Reaction to the crisis 2. The Energy Dependence Issue 3. The Bank Interconecction 4. Transmission Channels and Potential Impact 5. Vulnerabilities in EM and Eastern Europe
    • 19 • A negotiated solution (Transitory Impact) • Conflict confined to Crimea (Risk Aversion) • Military escalation (Risk Aversion + Russian Meltdown) Inside the uncertainty: Some alternative scenarios
    • 20 • Ukraine is unlikely to split; a loose federation arrangement is more likely. • Crimean referendum on autonomy might encourage other south- eastern regions to re- assess their status within Ukraine. • Moscow might intervene should south- eastern protests escalate and result in significant casualties. Inside the uncertainty: Some alternative scenarios Ukraine-Russia Affairs Source: Oxford Analytica
    • 21 Ukraine-Russia potential “Spill Overs” through different channels.. Stock Market Drops Risk premiums Rise (US-EZ-Jap bond yields drop) US$ strenghthen Food and Gold price rises Metal Prices drops GDP Growth & Recovery Expectations Drops Inflation RisesCapital OutFlows To Safe Havens Military intervention Russia & Ukraine Rise in Gas & Oil Prices EM Currencies Depreciation + Monetary Response EM Currencies Depreciation + Currency Mismatch Energy& Food Onfidence&Risk Aversion External& Monetary Policy & Currency Mismatch Channel Confidence & Global Risk Channel Cost Push Channel
    • 22 0 2 4 6 8 10 12 Mexico Russia Venezuela Turkey Brazil Indonesia Philippines Ukraine Colombia Kazakhstan Poland Lebanon Chile Hungary China Peru SouthAfrica Panama Lithuania Croatia Malaysia Argentina Uruguay 4.3 17.0 34.6 41.1 3.0 Africa Asia Europe Latin America Middle East 2.7 15.7 35.4 46.3 Africa Asia Europe Latin America 0 5 10 15 Turkey Russia Mexico Brazil Venezuela Philippines Indonesia Colombia Peru Panama Ukraine SouthAfrica Hungary Croatia Argentina Romania Bulgaria Ecuador Emerging Market Bonds (EMBI+) (% index) Emerging Market Bonds (EMBI+) (% index) Emerging Market Bonds (EMBI Global)) (% index) Emerging Market Bonds (EMBI Global)) (% index) 65% 35% Global Risk Aversion can increase through “margin calls” as Russia is a systemic EM country…
    • 23 -200 -100 0 100 200 300 400 500 600 700 800 2006 2007 2008 2009 2010 2011 2012 2013 2014 -10% (UnderShooting Phase) Emerging Markets: Cumulative Net Capital Flows (Cumulative since 2005, US$ bn) Source: BBVA Research, IMF and EPFR FEDTapering QE3+Dragui EM flows have entered in the “Undershooting” phase … (so less margin to fall) …but unevenly across countries
    • 24 Turkey: Cumulative Net Capital Flows (Cumulative since 2005, US$ bn) Source: BBVA Research, IMF and EPFR -10 0 10 20 30 40 50 60 70 2006 2007 2008 2009 2010 2011 2012 2013 México: Cumulative Net Capital Flows (Cumulative since 2005, US$ bn) Source: BBVA Research, IMF and EPFR 0 20 40 60 80 100 120 140 2006 2007 2008 2009 2010 2011 2012 2013 0 20 40 60 80 100 120 140 160 180 200 2006 2007 2008 2009 2010 2011 2012 2013 2014 Brazil: Cumulative Net Capital Flows (Cumulative since 2005, US$ bn) Source: BBVA Research, IMF and EPFR +18 % +12 % -24 % EM flows have entered in the “Undershooting” phase but unevenly across countries 0 20 40 60 80 100 120 140 2006 2007 2008 2009 2010 2011 2012 2013 2014 -11 % Russia: Cumulative Net Capital Flows (Cumulative since 2005, US$ bn) Source: BBVA Research, IMF and EPFR
    • 25 ProbabilityofSuddenStop (1-ω) BBVA Research Systemic Sudden Stop* Pressure Map (based on CAC Deficit and Domestic Liability Dollarization) Source: Calvo, Izquierdo y Mejia (2008) and BBVA Research ColombiaMexico 0% -4%+4% -8%+8%+12% -12% • Systemic Sudden Stop that take place in conjuntion with a sharp rise in aggregate interest rate spreads. See Calvo, Izquierdo and Mejia (2008) Bulgaria Romania Bosnia H Georgia Bosnia Belorrusia The probability of Capital Flows “Sudden Stops” is biased to Emerging Europe given the currency mismatch problem
    • 26 GDP Effects of Ukranian-Russian Crisis Scenarios* (% from base scenario cumulative 2014-15) Source BBVA Research Scenario 1: Energy and Trade Shock (short-lived) Scenario 2: scenario 1+ Global Risk Aversión Scenario 3: scenario 2 + Meltdown in Russia GDP Effects of Ukranian-Russian Crisis Scenarios (OEF) (% difference in Level GDP versus baseline 2015) Source OEF Energy & Trade shocks will not have significant effects. We would need “severe market distress for risky results. Russia is the Big Looser of the game (constraint) -4.5 -4.0 -3.5 -3.0 -2.5 -2.0 -1.5 -1.0 -0.5 0.0 US EMU Latam Turkey Eastern Europe Russia Energy and Trade Channel (ETC) ETC + Global Risk Aversion (GRA) ETC + GRA+ Russian MeltDown
    • 27 Index 1. The Market Reaction to the crisis 2. The Energy Dependence Issue 3. The Bank Interconecction 4. Transmission Channels and Potential Impact 5. Vulnerabilities in EM and Eastern Europe
    • 28 Ukraine will need inmediate assistance but institunional problems could limit the effects of the Bail Out… Ukraine: Current account to GDP Source: BBVA Research Ukraine: Cover Ratio (Reserves to Foreign short term liabilities) Source: BBVA Research 38% 40% 42% 44% 46% 48% 50% 2010Q1 2011Q1 2012Q1 2013Q1 -10 -8 -6 -4 -2 0 2 4 2005 2009 2013
    • 29 Emerging Europe is at the top of EM vulnerability… Vulnerability Radar: Shows a static and comparative vulnerability for different countries. For this we assigned several solvency , liquidity and macro variables and we reorder in percentiles from 0 (lower ratio among the countries to 1 maximum vulnerabilities.) Furthermore Inner positions in the radar shows lower vulnerability meanwhile outer positions stands for higher vulnerability Emerging Europe: Vulnerability Radar 2014 (Relative position for the Emerging Market countries. Max Risk=1, Min Risk=0) Source: BBVA Research Developed: (ST Public Debt/ Total Public Debt) Emerging : (Reserves to ST External Debt) 1: High vulnerability 0: Low vulnerability 0.0 0.1 0.2 0.3 0.4 0.5 0.6 0.7 0.8 0.9 1.0 GDP Growth Inflation Unemployment Rate Structural Deficit (% GDP) Interest rate-GDP Diferential 2013-18 Public Debt (% GDP) Debt Held by Non Residents (% total) Financial Needs (% GDP) Short T. Debt Pressure* External Debt (% GDP) RER AppreciationCurr. Account Deficit (%GDP) Household credit (%GDP) Corporate credit (% GDP) Financial liquidity (Credit/Deposits) Private Credit Growth Real Housing Prices Growth Equity Markets Political stability Control of corruption Rule of law Emerging Europe 2014 Emerging Europe 2013 Risk Thresholds Emerging 2014 Latam: Vulnerability Radar 2014 (Relative position for the Emerging Market countries. Max Risk=1, Min Risk=0) Source: BBVA Research 0.0 0.1 0.2 0.3 0.4 0.5 0.6 0.7 0.8 0.9 1.0 GDP Growth Inflation Unemployment Rate Structural Deficit (% GDP) Interest rate-GDP Diferential 2013-18 Public Debt (% GDP) Debt Held by Non Residents (% total) Financial Needs (% GDP) Short T. Debt Pressure* External Debt (% GDP) RER AppreciationCurr. Account Deficit (%GDP) Household credit (%GDP) Corporate credit (% GDP) Financial liquidity (Credit/Deposits) Private Credit Growth Real Housing Prices Growth Equity Markets Political stability Control of corruption Rule of law Latam 2014 Latam 2013 Risk Thresholds Emerging 2014
    • 30Risk Thresholds 0 20 40 60 80 100 120 140 UnitedStates Canada Japan Australia Korea Norway Sweden Denmark Finland UK Austria France Germany Netherlands Belgium Italy Spain Ireland Portugal Greece CzechRep Bulgaria Croatia Hungary Poland Romania Russia Turkey Argentina Brazil Chile Colombia Mexico Peru China India Indonesia Malaysia Philippines Thailand Gross Public Debt 2014 (% GDP) Source: BBVA Research and IMF 0 50 100 150 200 250 300 UnitedStates Canada Japan Australia Korea Norway Sweden Denmark Finland UK Austria France Germany Netherlands Belgium Italy Spain Ireland Portugal Greece CzechRep Bulgaria Croatia Hungary Poland Romania Russia Turkey Argentina Brazil Chile Colombia Mexico Peru China India Indonesia Malaysia Philippines Thailand External Debt 2014 (% GDP) Source: BBVA Research and IMF -10.0 10.0 30.0 50.0 70.0 90.0 110.0 130.0 150.0 UnitedStates Canada Japan Australia Korea Norway Sweden Denmark Finland UK Austria France Germany Netherlands Belgium Italy Spain Ireland Portugal Greece CzechRep Bulgaria Croatia Hungary Poland Romania Russia Turkey Argentina Brazil Chile Colombia Mexico Peru China India Indonesia Malaysia Philippines Thailand Household Debt 2014 (% GDP) Source: BBVA Research and BIS 0.0 50.0 100.0 150.0 200.0 250.0 UnitedStates Canada Japan Australia Korea Norway Sweden Denmark Finland UK Austria France Germany Netherlands Belgium Italy Spain Ireland Portugal Greece CzechRep Bulgaria Croatia Hungary Poland Romania Russia Turkey Argentina Brazil Chile Colombia Mexico Peru China India Indonesia Malaysia Philippines Thailand Corporate Sector Debt 2014 (% GDP, excluding bond issuances) Source: BBVA Research and BIS 242 174 383 318 1033 Emerging Europe is at the top of EM vulnerability…
    • 31 0 10 20 30 40 50 60 70 80 90 100 Latvia Croatia Lithuania Georgia Bulgaria .erzegovina Romania Macedonia Moldova Ukraine Poland Turkey Russia CzechR. Uruguay Peru Paraguay Honduras Chile Brazil Colombia Argentina Singapore HongKong Indonesia Korea India Emerging Markets: FX Loans 2012 (% Total Loans, 2012 or latest available data) Source: IMF Emerging Markets: Current International Reserve Adequacy 2013 (%GDP) Source: BBVA Research Including Special and Relevant problems…
    • 32 05 07 09 11 13 15 17 19 21 23 25 2008 2009 2010 2011 2012 2013 Dev. Markets CEECs CIS Russia Ukraine Capital Adequacy of the banking system (regulatory capital ratios) Although Banking Systems are well capitalized…
    • 33 Corporate exposure to sovereign defaults is also relevant Emerging Market Holders of Government Debt (% of total) Source: IMF