ENCOURAGING trends in emerging markets belie their volatility since the taper tantrum of 2013, when the Federal Reserve signalled it was pulling back on quantitative easing. Further turbulence is likely, despite the improving outlook for advanced economies, easing trade tensions and accommodative monetary policy.
The International Monetary Fund (IMF) estimates that growth in developing countries fell to 3.7% last year, the slowest pace since 2009 and well below the IMF’s July 2019 forecast of 4.1%. An expected rebound to 4.4% this year assumes highly uncertain recoveries in stressed economies such as Argentina, Iran and Turkey, as well as in countries where growth has slowed significantly – China, Brazil, India, Russia and South Africa among them.
Rising friction in the Middle East, if sustained, could result in higher energy prices and supply disruptions for developing countries. India, which recently downgraded growth for the 2020-2021 fiscal year to 5%, the slowest pace in a decade, imports more than 70% of its oil needs.
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