Tour of Emerging Markets

29th November 2017
-News, IAM

Erika Mesmer, Client Relationship Manager

In this month’s newsletter we would like to take a closer look at the Emerging Markets.

After a slowdown in 2015 and 2016, economic growth is back in most regions of Emerging Markets. With China, which is experiencing a slight slowdown, Asia is stabilising at a high level, while growth is at its highest level since four years in South America.

Looking at consumption, based on retail sales, the situation is interesting. In Emerging Europe figures are stable, with Russia, after a difficult year in 2015, which had a strong year 2016 and is back in positive territory since mid-2017. The picture in Latin America is similar, with Brazil experiencing a strong rebound after some very difficult years. In Asia, the growth rate of consumption is slightly slowing down in China, while the whole region is flat at high rates of 7-8%.

Industrial production is another indicator providing interesting signals. Emerging Europe, pulled by a very dynamic Eurozone, is very strong this year. Emerging Asia remains stable, while Latin America has worked its way out of a recession.

Manufacturing PMIs show the following: currently, all regions are in expansive territory, with Emerging Europe flat at a very high level, and Latin America returning to positive territory during the year.

Looking at worldwide trade, exports are stabilising at a growth rate of about 10%. This follows a period of contraction in 2015 and recovery in 2016. Looking at countries individually, most, except Argentina, have positive year on year figures and the league table is currently topped by Chile, Vietnam, Brazil and Russia, with the latter two rebounding strongly after a very difficult period.

The various regions offer a mixed picture with regards to inflation. Emerging Europe shows signs of rising inflation, having passed the level of 5%. Latin America, excluding Venezuela and Argentina, sees its inflation dropping to a level currently below 4%. As for Emerging Asia, the inflation rate has been, for a few years now, very stable around 2%.

Although, and this is noteworthy to mention, all regions in Emerging Markets are faring rather well simultaneously, we would currently strongly favour the Emerging Asian region, which distinguishes itself by its stable dynamism.