Emerging markets: After a disappointing 2013, we expect growth in emerging markets to accelerate in 2014/2015, in line with brighter prospects for the global economy. Emerging markets will continue to grow considerably faster than the advanced economies in the coming years. Even so, downward risks to the outlook remain significant. A possible flaring up of risk aversion may well dampen the prospects for capital inflows. Structural imbalances, together with the lack of necessary reforms and political discontent, could negatively affect growth. Downward risks could also arise should growth in the advanced economies and China disappoint.
Emerging Asia, calm after the storm: During the first half of 2013 the region’s economic activity had slowed down somewhat, while current account deficits in India and Indonesia were raising concerns against the background of potential Fed tapering. After the Fed delayed tapering in September and the most affected countries implemented adjustment measures, the situation has stabilised. The outlook is brighter for 2014, although in 2015 the impact of China’s reforms will lead to slightly slower growth.
Emerging Europe, higher growth expected in 2014 and 2015: Regional growth will slow further this year to a post-crisis low of 1.5%. This mainly stems from disappointing growth in Russia. Given its large external imbalances, Turkey, in particular, remains vulnerable to market turmoil stemming, for instance, from a flaring up of tapering concerns. On the back of the projected, albeit modest, recovery of the eurozone, we expect regional growth to accelerate in 2014, gaining further momentum in 2015.
Latin America, better prospects after a gloomy year: Disappointing growth in 2013 is partly attributable to weaker global growth and to domestic developments (policy and political uncertainties). Now that the US economy is rebounding, Europe is gradually climbing out of the trough and China is continuing to expand vigorously, we think that the region’s growth outlook is more favourable for next year.