While 2020 started off on a very positive note, geopolitical tensions were a keen reminder that the year is unlikely to be smooth sailing for any country, let alone emerging markets.
Prepare to hunker down for an unpredictable ride because it is going to be a largely politically driven year, with Brexit and US elections the known unknowns, accompanied by the potential of many unknown unknowns that could set investors on another trajectory. Emerging markets would be particularly hard hit by souring sentiment and a more protracted backslide in economic fortunes.
The assessment is based on the economic growth rates of the rest of the emerging market universe having “failed to meaningfully outperform” developed market growth rates since 2013. There is little sign of that changing. Most concerning is that the slowing has been in parallel with large declines in gross fixed capital formation, with consumption holding up better, as it has in the rest of the world.
South Africa finds itself in the second group, alongside Mexico. The similarity of the two countries is that both of their central banks have resisted the urge to boost the economy by adopting monetary policy stimulation measures. However, they have ended up pretty much in the same place as the other underperforming emerging markets because “the end-result has been growth that has slowed to near zero”.
Belgique Dernières Nouvelles, Belgique Actualités
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