Three things the Franklin Templeton Emerging Markets Equity team are thinking about today

Partial trade deal: News that the United States and China reached a partial trade deal in October was cheered by investors globally. The ‘phase one’ agreement, which was originally expected to be signed in November, is said to cover agricultural products, financial services, currency and intellectual property. While the deal is still in flux, the United States did suspend the tariff increase on Chinese imports that was scheduled for 15 October. Domestic consumption now makes up the lion’s share of China’s economic growth, accounting for 76% of gross domestic product (GDP) in 2018, up from 59% in 2017.

IMF: While concerns of a slowdown in economic growth have been weighing on market sentiment, the International Monetary Fund (IMF) expects global growth to accelerate in 2020, driven primarily by a recovery in economic activity in emerging markets (EMs). Improving fiscal, economic and monetary policies and a renewed focus on structural reforms in several EMs appear to be gaining traction. The results of these trends are expected to become more evident in strengthening GDP growth in 2020, which could also provide a more favorable operating environment for EM companies..

Technology is expected to become a key driver of global growth, especially in EMs where companies have been using innovation and technology to leapfrog and disrupt traditional business models. EMs’ accelerating internet usage and penetration are likewise hastening opportunities for efficiencies, cost savings and ease of doing business. Since the turn of the century, we have also witnessed a significant increase in the trade value of ‘high-tech’ goods being exported by EM countries. Compound annual growth in these types of exports is expected to be 16% for the years 2017-2023.

‹ Previous2019-11-28Next ›