Emerging market growth slowed significantly in 2019 and the outlook for emerging markets in 2020 has tipped over to negative due to uncertainties around trade, politics and policy, Moody's said in new report. However, individual emerging market countries and corporations may have different degrees of exposure to each of these uncertainties, since emerging markets encompass a broad range of entities across Asia, Latin America, Eastern Europe, Middle East and Africa. "Although recession risk is in focus globally, we do not expect a recession to materialize in any of the larger emerging market economies except in Argentina," said Moody's Senior Vice President Gersan Zurita. "Emerging markets will continue to have higher growth than developed markets with an expected average economic growth above 4.5% in 2020, compared with just under 1.5% across the largest advanced economies in 2020. However, growth rates are well below their historical averages, particularly in larger economics like Mexico, Russia, India and China." While trade tensions have increased globally, lower tariffs in Brazil and the prospect of the USMCA agreement moving closer to ratification highlight that trade developments could vary across regions. Across Latin America, growth is recovering but domestic political and policy risk are hampering structural reform in some countries. Weak growth, policy unpredictability and geopolitical risk drive the negative outlook for emerging markets in EMEA. The slowdown in global trade in 2019 has dented emerging market manufacturing and export sectors. Meanwhile, Moody's expects stable conditions for infrastructure sectors in emerging markets. Ongoing infrastructure investment will be needed to support economic growth in countries such as Saudi Arabia, Kenya and Oman and to reverse weakening growth in South Africa. Decarbonization efforts in CEE and in coal-dominated South Africa will also stimulate investment. — SG
