More sustainable EM growth, as evident in less volatile gross domestic product (GDP) growth figures and the composition of GDP. For example, China (FXI) is working to make its growth more sustainable by cutting investment and boosting consumption. Brazil is aiming for the opposite – boosting investment and cutting consumption. The situation in India, as in Brazil (EWZ), will require a significant investment in infrastructure, as well as a less bloated public sector. Finally, Russia is trying to reduce its dependence on oil revenues and manage its fiscal deficit.
Market Realist – The graph above shows the International Monetary Fund’s (the IMF) projected growth rates for major economies in 2015. China (FXI) is expected to grow at 7.3%, whereas India (EPI) could grow at 6.4%. The ASEAN 5 (the Association of South-East Asian Nations)—which include Thailand, Malaysia (EWM), Vietnam, Indonesia, and the Philippines—are projected to grow 5.6%. Overall, emerging markets (EEM)(VWO) will continue to grow faster than developed markets (EFA)(VEA) in 2015.
The BRIC nations are working on restoring their fiscal balance. But they might continue to grow fast, according to the IMF—though not at the blistering pace they were growing at in the 2000s.
Please read the next part of this series to see how inflation is faring in emerging markets.