Emerging Markets Surging Into 2018

Emerging markets continue to look favorable in 2018, according to experts and market outlooks.

Looking at emerging economies, LPL Financial expects growth near 4.8% in 2018, as “advantageous demographics, stable commodity prices, and early cycle acceleration help offset slowing but stable growth in China.”

According to LPL, the stories to watch next year are India’s role as “the new China,” given its size and growth potential, and possible rebounds in Latin American economies.

LPL says that the return of the business cycle will be most evident from the lenses of China and the U.S. dollar.

“Despite the slowdown in the pace of output growth in China, emerging economies have held up well, showing resilience and flexibility in economic performance,” according to LPL.

State Street Global Advisors expects similar outcomes in emerging markets next year.

According to SSGA’s 2018 Market Outlook, EM growth will likely quicken to a five-year high, assuming “China focuses on reining in debt gradually and Brazilian politics do not derail either the tentative progress on structural reforms or the budding cyclical recovery.”

According to SSGA, four fundamental factors should sustain EM growth over the next year: a pickup in global trade, higher commodity prices, a weaker U.S. dollar and monetary policy shifting to a pro-growth agenda.

Looking longer term, SSGA says emerging markets still have a “demographic advantage, considerable room for catch-up growth, and, relatively speaking, greater potential for policy stimulus.”

Both LPL and SSGA expect most emerging economies to continue to draw investors in.