Our view of global growth is optimistic. While it is true that some economic blocks are heading towards a mild and shallow recession, this is a supposed outcome derived from restrictive policies to slow down demand.
In this context, deeper recession unlikely. The real issue is that, from a structural point of view, we foresee a prolonged economic expansion, driven by technology and rivalry, led by USA and China.
The emerging markets They are in a privileged position to benefit from the positive effects of this calibration. The growth forecasts of the International Monetary Fund in his report on the "World economy perspectives" of April support this thesis; Even as Chinese growth transitions to a new steady state and DM growth returns to trend, the China of emerging markets to lead the way with a 3% growth premium relative to the DM in the coming years. History has shown us that this situation encourages capital inflows into emerging markets.
On the other hand, the great inflationary wave has taken over the investment community in the last 18 months; It has been a perfect storm, as demand after the reopening crossed with the tightness of the Energy markets and geopolitical turmoil in Eastern Europe. That said, there are now clear signs that inflation has peaked in emerging markets and is slowing rapidly in many cases. Decade-long structural disinflationary megatrends – such as technology, debt spirals and demographics – remain intact and are once again putting downward pressure on inflation as post-pandemic distortions normalize.
With inflation in the spotlight, we believe the vast majority of emerging market central banks have completed their tightening cycles; further rate cuts are likely to be ruled out in the coming months. With inflation peaking and central banks pivoting, global capital is likely to once again head towards emerging markets.
Additionally, the issue of moderation of growth in China has been a major drag on many emerging market economies in recent years. The reopening of the Chinese economy is a welcome development, acting as a counterweight to slowing growth in the West, but also boosting demand for emerging market exports such as raw materials. So far, the narrowness of the recovery in China has been discouraging; Greater effort is required on the part of policy makers. Pekin to rejuvenate the real estate sector and, by extension, household confidence and consumption.
We are optimistic that significant political measures will be taken to support the recent statements of the Prime Minister Li. In any case, not everything is bad news in China. It is still an $18,5 trillion economy that is likely to grow around 5% this year. It is expected that Asia represents 70% of global growth, and much of this will come from China.
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