The International Monetary Fund (IMF) didn’t mince its words in June when it said economic activity in emerging markets has decelerated at its quickest pace in 50 years.
A direct result of the Covid-19 pandemic, the economic slowdown isn’t only occurring in emerging markets – but it’s felt at a much larger scale in these countries because they don’t always have as many financial stimulus levers to pull, and they’re typically more vulnerable to what’s happening in global markets (think plunging oil prices, for example).
Before the pandemic, emerging markets had built a solid case for investment. Some of the world’s biggest and fastest-growing companies have their base in emerging markets, including Alibaba (China) and Samsung (Korea). The 25 to 30 countries considered to be an emerging market (a country that’s transitioning to a high-income base) were contributing 74% of global growth and were expected to increase this up to 84% by 2023, according to fund manager Fidelity International. The Fidelity Global Emerging Markets Fund won Money’s 2020 Best International Emerging Markets Fund (see table on p62).
Post pandemic there’s potential for these growth numbers to return, but it’s a widely held view that this storyline will be lengthy. It’s because some emerging markets heading into 2020 with high debt and limited capacity to help their health sectors or offer financial stimulus to citizens and businesses. The IMF says emerging markets (EM) on average have responded to the coronavirus with financial stimulus totaling 2.8% of GDP, while in advanced economies this figure is 8.6%. It means the road back to “normal” for emerging markets is likely to belong.
Esta historia es de la edición August 2020 de Money Magazine Australia.
Comience su prueba gratuita de Magzter GOLD de 7 días para acceder a miles de historias premium seleccionadas y a más de 9,000 revistas y periódicos.
Ya eres suscriptor ? Conectar
Esta historia es de la edición August 2020 de Money Magazine Australia.
Comience su prueba gratuita de Magzter GOLD de 7 días para acceder a miles de historias premium seleccionadas y a más de 9,000 revistas y periódicos.
Ya eres suscriptor? Conectar
An outrageous, beautiful monopoly
Telstra's mobile business is a cash machine with few competitors, giving it the highest returns in the world.
Drop the anchor to judge value
Buying and selling decisions should be based on where a stock price is going, not where it has been.
Powering the AI boom
Beyond the software and chipmakers, where will the energy come from?
Get into life
Tucked inside super are products that can protect you from life's inevitable uncertainties.
Paths to home ownership
Taking the road less travelled can sometimes deliver unexpected benefits.
Sold! Quick ways to add value
Small, strategic changes can have a big impact on the look and feel of your home. And get you a better price on auction day.
Money lessons the kids need to know
Your children can learn a lot from your past money mishaps. Here are eight financial conversations I have had with mine.
Property-investing rules: are they likely to change?
The pressure for the government to curb the tax benefits of tax concessions, such as negative gearing and the capital gains tax discount, is unrelenting. Most recently, independent senators David Pocock and Jacqui Lambie proposed five options for paring back investment property tax concessions, with savings to the Federal budget of up to $60 billion over the next decade.
What's love got to do with it?
A rollercoaster of emotions could be driving poor crypto behaviour.
Are we ready to be cash-free?
Saying goodbye to our piggy banks too soon could leave small businesses in the dark when problems arise.
