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The return of domestic demand: EM's next growth driver
Weekly investor research
11 September 2017
Emerging Markets (EM) growth is accelerating and so far this is mainly due to a pick-up in exports. The next big growth push will come from domestic demand as inflows into local markets ease financial conditions. After record outflows from EM over the past several years there is considerable room for growth upside surprises, in our view. We believe most analysts have missed this point, because they did not accurately identify the turn in the QE trades. We therefore expect broad-based upgrades to EM growth forecasts in the coming quarters, even years. In the global backdrop section we discuss dovish statements from two Fed officials and the short-term extension to the debt ceiling.