Emerging Markets: Glass Half Full

Emerging Markets (EM) is now 60 percent of the world’s GDP and more than half of new consumption over the past 15 years, with forecasts indicating 63 percent by 2023. EM economies are projected to grow at a robust 4.8 percent for the next 5 years, even more than the annual historical average at around 4.5 percent. The real significance of EM growth is shown by comparing EM to Developed Markets (DM). While EM growth is still going strong, Developed Markets (DM) are projected to see a significant slowdown in growth. The projected GDP growth of DM economies is 1.8% for the next 5 years, considerably less than the 2.4% they have averaged historically. This is roughly 25 percent less growth for DM compared to the positive projected growth of EM economies. For investors looking forward to 2019 and beyond, growth opportunities across all market caps within Emerging Markets present compelling investment cases. We have recently seen Wall Street begin to anticipate the growth opportunity with Morgan Stanley recently double-upgrading emerging market equities to overweight from underweight while downgrading U.S. equities.