A strong 2017 – but 2018 will be more challenging

Our GDP Tracker suggests that the emerging world is on course to grow by just over 4.5% in 2017 – it’s fastest pace of expansion in six years.  The pick-up has been broad-based, with growth in Emerging Asia, Emerging Europe and Latin America accelerating and key economies including Brazil and Russia pulling out of recession. Looking ahead, we expect growth in Brazil, India and Russia to accelerate further in 2018, but think that the cycle in other EMs is now close to peaking. Growth in Turkey, Argentina and – most importantly – China is likely to slow next year. The net result is that aggregate EM growth is likely to weaken in 2018, which in turn will contribute towards a more challenging year for EM financial markets.