Emerging Economies: The Countries to Watch in 2024

Emerging Economies: The Countries to Watch in 2024

With the world economy expected to grow at a moderate pace in the near future, emerging markets are expected to be the driving force of the economy in 2024. Despite the fact that the growth is projected to average 4% in the course of the year, some of the emerging markets are expected to perform better than others this year.

India: A Resilient Performer

India has been one of the most resilient economies of the emerging markets and the same trend is likely to continue in 2024. The country’s GDP growth is expected to continue to grow at a fairly good rate, although it is expected to slow down from the 2023 levels. Nevertheless, India’s government has chosen to present a cautious budget for the future elections, though it has kept the debt in check while still supporting the infrastructure. This cautious fiscal policy has also assisted in addressing issues on over expenditure and increasing deficits.

Brazil: Navigating Political Shifts

Another emerging market that had better performance in 2023 is Brazil, which is projected to experience a slowdown in growth this year. However, the country’s growth is expected to be rather robust in the future. The recent changes in the political landscape have been triggered by the recent election results but the policy environment has not been significantly altered. The central bank of Brazil has been aggressive in increasing the interest rates to control inflation and the positive impact of its sound monetary policy is visible.

China: Balancing Growth and Stability

China: Balancing Growth and Stability

The Chinese economy is still a concern as it has not clearly defined its growth trajectory due to property market imbalance and consumer confidence issues. But the government’s selective interventions have enabled the country to attain a 5. 2% growth in 2023. China is targeting 5% growth and 3% inflation for 2024 and therefore more government support is expected to be forthcoming. The uncertainty in China has affected the investors’ behavior and some of the capital has been diverted to other emerging markets.

Divergence and Resilience

However, the overall growth is projected to improve in most of the emerging markets in 2024 although there is a stark contrast between different regions. Some of the countries in Latin America including Peru and Colombia are expected to see a slight improvement in the growth rate while others including Chile are expected to see a decline in the growth rate. In the EMEA region, the growth outlook for Türkiye has been raised while the growth outlook for Saudi Arabia and South Africa has been downgraded. On the other hand, the Southeast Asian economies are projected to sustain a steady recovery with only Thailand among the countries of the region having to revise downwards its growth outlook.

Navigating Challenges and Risks

However, there are still some issues and threats that can be seen in the emerging markets. The potential constraints include high interest rates and a slowdown in the growth of the US economy in the second half of 2024 due to the delayed impact of the interest rates. Furthermore, the highest number of elections planned for this year also creates uncertainties on policy stability and institutional environment in some countries. Geopolitical risks, including the conflicts in Gaza and Ukraine, are still there, albeit their impact on the economy and the financial markets has been rather limited.

Attracting Long-Term Capital

In order to sustain long-term capital flows, the emerging markets have to further enhance their macroeconomic fundamentals and institutional environment. Those countries with sound fundamentals can borrow in the international capital markets at lower costs as compared to those with weak fundamentals who are charged high risk premiums and have limited access. Private capital is essential for the energy and food transformations that are required to achieve climate objectives and decrease poverty.

Conclusion

In the context of the global economy that is gradually recovering but with a rather slow pace, emerging markets will be able to contribute to the development in 2024. Although the overall growth is expected to continue at a fairly constant pace, certain economies such as India, Brazil and China should be viewed as the most promising. However, the emerging markets face some problems like delayed impact of high interest rates, political risks, and the necessity of attracting long-term investments for the sustainable development. Through these issues and leveraging on their opportunities, the emerging economies are well positioned to support the overall stability and growth of the world economy in the next one year.

Jeffrey Scott

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