U.S. Stimulus Spillover Muted in Emerging Markets

The spillover effects from U.S. President Joe Biden’s $1.9 trillion stimulus on the rest of the world may be smaller than many expect. Countries with a high share of trade invoicing and borrowing in dollars may even see a drag as a strengthening U.S. currency dents competitiveness and adds to financing costs. Analysis by Bloomberg Economics reveals that, in general, spillovers are most positive for advanced economies. For many emerging markets they are negative -- and in some cases significantly negative. Canada and the U.K. are the biggest winners. Brazil and Argentina may lose out.