uploads///Projections for India and ASEAN

IMF Economic Update: Still Upbeat on Some Emerging Economies


Nov. 20 2020, Updated 10:58 a.m. ET

Economic prospects for India

The IMF (International Monetary Fund) left its economic growth projection for India unrevised in its July update of a report originally issued in April. The agency expects the Indian economy will grow by 7.5% in both 2015 and 2016. These are strong numbers for any nation given the current macroeconomic circumstances.

Investors should note that these projections are calculated based on the fiscal year. And in India, the fiscal year begins in April and ends in March the following calendar year.

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The IMF defines the ASEAN-5 as Indonesia, Malaysia, Vietnam, the Philippines, and Thailand. In case you’re wondering about the instruments that allow you to invest in some of these nations, you can refer to our series, Are You Thinking about Diversifying Your Portfolio? The series also provides some information on the macroeconomic picture of these nations as compared to other regions.

The IMF expects this region’s economy to grow by 2.9% in both 2015 and 2016. The 2015 projections in the July update are unchanged from April’s estimates. However, expectations for growth in 2016 were revised downward by 0.3%.

What’s in it for investors?

First, irrespective of how strong economic fundamentals look, investors should be careful about investing in emerging markets and other economies that are relatively unknown to them. Shots in the dark can hit a bull’s-eye once, but can sting several times, too.

That’s not to say that investing in emerging nations should be avoided. Depending on one’s risk appetite, such investments should be used for diversification, as they provide exciting opportunities and may give that required edge to your portfolio.

Though Indian equities have corrected recently, macroeconomic fundamentals aren’t pointing to a crash. You can read more about this in our series, Will the Indian Stock Market Crash in 2016?

The iShares MSCI India ETF (INDA) and the WisdomTree India Earnings ETF (EPI) provide exposure to Indian stocks including ICICI Bank (IBN), Dr. Reddy’s Laboratories (RDY), and Infosys (INFY).

Meanwhile, the iShares MSCI Emerging Markets ETF (EEM) and the Vanguard FTSE Emerging Markets ETF (VWO) invest in the ASEAN-5 countries, as well as other emerging markets. For country-specific exposure, you could look at the iShares MSCI Indonesia ETF (EIDO) and the iShares MSCI Malaysia ETF (EWM).

We at Market Realist will continue to monitor developments in the global macroeconomy and keep you updated via our Macro ETF Analysis page.


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