How will emerging markets fare this year? – FocusEconomics
As in recent decades, our consensus is that Asian economies will show the fastest growth among emerging markets this year. Favorable demographics, relative institutional stability, high savings rates, and openness to global trade can all help explain Asian exceptionalism. Among the economies of the region Bangladesh, India And Vietnam they are expected to be top performers while China should increase by about 5% due to the lifting of Covid-19 restrictions.
Rise of Africa
Sub-Saharan Africa (SSA) is likely to become the second fastest growing region in the world. And if we exclude a sluggish economy South Africa And Nigeria, growth will be more than 4%, which is comparable to the pace in Asia. SSA’s rapidly growing population, strong demand for goods, many of which are needed to transition to a green economy, and incremental improvements in governance all support the outlook. However, reliance on the commodity sector leaves the continent at the mercy of fluctuating commodity prices and extreme weather events.
Middle of the road
Our participants agreed that this year the Middle East and North Africa will record growth of about 3%, which is a slowdown compared to last year, as oil production in the region stagnates and oil prices decline. At the same time, economic reforms aimed at abandoning oil will contribute to the growth of energy exporters, UAE the undisputed leader on the reform front. Recent improvements in intra-regional relations also augur well, although IsraelRussia’s new right-wing government risks nullifying part of the country’s rapprochement with the Arab states.
Lagging Latin America
According to our experts, Latin America is expected to grow by a measly 1.0% this year. The region’s central banks have been the most aggressive in the world in the past 18 months, with interest rates in many countries now in double digits. In addition, socio-political uncertainty will hit investments – whether it be unrest Peru after the arrest of former President Castillo, the lack of clarity regarding ChileRussia’s new constitution, or investor concerns about fiscal policy Brazil under Lulu.
Battle scars
Eastern Europe will be the worst-performing emerging market region, mainly due to an expected contraction Russia And Belarus as Western sanctions tighten. The economies of other Eastern European countries will suffer from worsening trade ties with Russia, high inflation and tighter monetary policy.
Information from our network of analysts
Hello Africa, African Development Bank said:
“The economic resilience of African countries in the short to medium term is cautiously optimistic given significant global uncertainty. In some African countries, the risk of debt defaults could rise given the already high accumulation and changing structure of public debt over the past decade, additional financial pressure from the appreciation of the US dollar, and tightening monetary conditions around the world. High reliance on commodity exports with limited value added may delay the structural transformation associated with the transition to a green economy. In addition, political risks may increase in 30 African countries.”
Hello China, Goldman Sachs analysts said:
“The rapid improvement in domestic mobility and robust activity data for Jan-Feb suggest that China’s post-reopening recovery appears to be stronger than our previous expectations, driven largely by reopening momentum and fiscal support. However, it also leaves less incentive to reopen in 2024 and slightly increases the risk of an earlier policy normalization later this year than our previous baseline. Thus, we raise our forecast for GDP growth in the first quarter.”