Commodity prices remain subject to heightened levels of uncertainty as reopening efforts continue to evolve. We expect Brent oil prices to remain steady in 2020-2021 and natural gas prices to increase modestly. Base metals could balance in 2021, limiting further increases in prices. 

Early September tech selloff has dented this year’s outperformance of ESG indices, which tend to be tech-heavy; However, appetite for ESG ETFs remains strong, with ytd flows nearing $140bn (vs just $25bn over the same period in 2019)

The August/September edition of the Insurance Update provides targeted updates on IIF insurance activities and events, and highlights relevant IIF publications or related regulatory developments in other fields. 

This IIF member briefing note identifies key issues in a number of the current and emerging proposals, on a key topic that will merit ongoing monitoring.

Widening fiscal deficits could create financing challenges going forward. As the economy recovers, domestic investors may provide less funding. If fiscal consolidation is not realized, “prescribed assets" are one option. South Africa could also approach the IMF for a Stand-by-Arrangement.

Voluntary carbon offset (VCO) issuance has grown strongly in recent years, doubling in 2019 to nearly 130 MtCO2e; However, trading volumes have been subdued since peaking at 135 MtCO2e in 2008.

The new IMF program improves the funding outlook. An external financing gap next year cannot be ruled out. High borrowing needs would require tapping additional sources. Limited REER adjustment could exacerbate external vulnerability. The February 2021 election adds program implementation risk. 

Demonstrations and strikes continue following the disputed election. The most likely near-term scenario is a prolonged political stalemate. We consider a number of scenarios to assess external financing stress. In the absence of further escalation, reserve losses would be manageable.

We expect Pakistan to return experience modest growth in FY2020/21 following a small contraction in FY2019/20. However, risks to the economic outlook are tilted to the downside. Recurrent outbreaks of COVID-19, a large fiscal deficit, and high public indebtedness remain major challenges. 

Global sustainable debt issuance surpassed $270bn during the first seven months of 2020, up 5% from 2019. The sustainable debt universe has now topped $1.5tn for the first time—80% in EUR, USD, and CNY