Business Maverick: Bruised Emerging Markets Are Battle-Ready for a US Recession

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Emerging markets are well positioned to stare down a US recession and may even be able to lure investors their way.

“If China is still growing reasonably well, it could partially mitigate the fears of a US or Europe recession,” said Claudia Calich, the head of emerging-market debt at M&G Investments. “While there are still potential macro headwinds and some of the weaker countries may face difficulties, prices and valuations have already adjusted very significantly and a lot of the negative factors are already priced in.

“A recovery in China from the zero-Covid-related shutdown would certainly be helpful,” said Kamakshya Trivedi, the co-head of global currency and interest-rates research at Goldman Sachs Group AG. “I doubt that it would completely shield emerging markets from the adverse effects, but it would mitigate the impact.

“A broad-based emerging-market recession is not our baseline, even if our colleagues expect one in the US,” said Harvey.Rate decisions in Israel, Malaysia, Pakistan, Peru, Poland and Sri Lanka will be closely watched as policy makers grapple with price pressures, President Alberto Fernandez tapped leftist economist Silvina Batakis as the country’s new economy minister Sunday after her predecessor’s resignation Saturday.

 

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