Emerging Market Growth Prospects Amid Global Slowdown
Economic → Global Market Trends
| 2025-11-08 16:53:28
| 2025-11-08 16:53:28
Introduction Slide – Emerging Market Growth Prospects Amid Global Slowdown
Navigating Change: Resilience and Opportunity in Emerging Markets
Overview
- Emerging markets are set to grow at a slowing but resilient pace during 2025, outpacing advanced economies by more than two times despite a challenging global environment.
- Understanding EM dynamics is critical for investors and business leaders seeking returns in a low-growth world and looking to benefit from demographic, technological, and policy shifts.
- This presentation covers major growth drivers (digital transformation, domestic demand, green transition), geographical divergence, risks (inflation, geopolitics, trade), and the outlook for investment flows and policy.
- Key insights include acceleration in digital infrastructure, a focus on sustainable investment, and the importance of stock selection amid heightened dispersion between EM countries.
Key Discussion Points – Emerging Market Growth Prospects Amid Global Slowdown
Drivers, Risks, and Lessons for 2025–2026
Main Points
- Digital transformation is accelerating in EMs—mobile banking, e-commerce, and fintech are expanding rapidly, particularly in Southeast Asia, India, and parts of Africa, creating new consumer markets and investment opportunities.
- Sustainability and green investments are rising in EMs, even as developed markets face policy uncertainty; this sector may offer both growth and resilience.
- Growth is slowing (3.7% forecast for 2025, below 4% historical average), but remains well above advanced economies; inflation is trending down but remains elevated, with significant country differences.
- Domestic demand and central bank credibility are key buffers against global volatility, while ongoing trade tensions, tariffs, and policy uncertainty remain major risks.
- EM equities and currencies are rallying, driven by strong earnings, weaker USD, and diversification demand, but dispersion between countries is extreme—Poland up +35%, Thailand down -12% year-to-date.
- Active management and stock selection are crucial; large-caps in India, rebound potential in China and South Korea, and local small-cap stories offer diverse opportunities.
Graphical Analysis – Emerging Market GDP Growth vs. Advanced Economies
Growth Trajectory: Emerging Markets Outpacing the Developed World
Context and Interpretation
- This chart illustrates the resilience of EM growth rates relative to advanced economies, even as global headwinds slow momentum.
- Despite a projected dip below historical averages, EMs are expected to grow 2–3 times faster than advanced economies in 2025, highlighting their importance in global portfolios.
- Country risk and policy uncertainty introduce volatility, but deep domestic markets and digital adoption continue to drive relative outperformance.
- The chart underscores the case for EM exposure despite the global slowdown, though with heightened need for selectivity and risk management.
Figure: Emerging Market vs. Advanced Economy GDP Growth (%)
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{"Year": 2023, "Emerging Markets": 3.9, "Advanced Economies": 1.7},
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Analytical Summary & Table – Regional and Sectoral Outlook
Divergence, Opportunity, and Risk: A Snapshot
Key Discussion Points
- Growth and equity performance are highly uneven across EMs: digital leaders (Southeast Asia), reform-driven (India), and select Latin American countries stand out, while export-dependent Asian markets lag.
- Inflation trends vary widely, with some countries still grappling with double-digit rates; China remains a notable outlier with zero inflation, reflecting weak domestic demand.
- The sustainability focus and digital leapfrogging provide structural tailwinds, but tariffs, geopolitics, and policy unpredictability pose material downsides.
- Equity investors should expect both opportunity and volatility—active management, thematic exposure, and careful country selection are essential.
Illustrative Data Table
Selected Economic and Market Indicators, 2025
| Region/Country | 2025 GDP Growth (%) | Equity YTD (%) | Inflation (2025%) | Key Risk Factor |
|---|---|---|---|---|
| Southeast Asia | 4.2 | 8.5 | 3.5 | Trade, geopolitics |
| India | 6.0 | 10.0 | 5.0 | Oil, reform continuity |
| China | 4.0 | 5.0 | 0.0 | Domestic demand, stimulus |
| Latin America | 2.0 | 7.0 | 6.0 | Commodities, policy |
| Advanced Economies | 1.4 | 6.0 | 2.5 | Rate policy, tech cycles |
Graphical Analysis – EM Equity Performance Dispersion
Dispersion Below the Surface: Not All EMs Are Equal
Context and Interpretation
- This chart demonstrates the extreme dispersion in equity performance across EMs, despite a modest headline index gain.
- Poland’s rally and Thailand’s decline illustrate the country-specific risks and opportunities that dominate EM investing in 2025.
- Active management and deep local knowledge are critical to capturing alpha and avoiding value traps.
- Investors must look beyond averages and index-level data to build robust portfolios in this environment.
Figure: Selected Emerging Market Equity Returns YTD 2025 (%)
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Video Insight – EM Digital Transformation and Consumer Growth
Capturing the Next Billion Consumers: The Digital Leap
Key Takeaways
- EM digital transformation is accelerating access to financial services, e-commerce, and education for previously underserved populations.
- Rapid mobile adoption and fintech innovation are unlocking new consumer markets, particularly in Southeast Asia and Africa.
- Businesses that localize digital offerings and leverage platform ecosystems can capture outsized growth.
- Policy support and infrastructure investment are critical to sustaining this growth and mitigating risks of digital exclusion.
Conclusion
Emerging Markets in 2025: Selective Growth Amid Global Headwinds
- Emerging markets remain a key engine of global growth, but divergences across regions and sectors demand a nuanced approach.
- Digital transformation, sustainable investment, and resilient domestic demand offer structural tailwinds, while inflation, geopolitics, and trade uncertainty present persistent risks.
- Active management, country and stock selection, and thematic exposure are essential to capture opportunities and manage downside.
- Investors and business leaders should monitor policy developments, currency trends, and local consumer dynamics to stay ahead in this complex landscape.
