EM growth has been resilient to US import tariffs, but headwinds from fiscal tightening, softer labour markets and (for some) lower commodity prices will drag growth down over the coming year. Most of our 2026 GDP growth forecasts lie below the consensus. This is still a relatively benign picture though. Growth is slowing, not slumping. Financial risks are limited. And central banks have room to cut interest rates further – and by more than is widely expected in some EMs. That makes a constructive environment for EM financial markets, although we’re unlikely to see a repeat of the stellar outperformance earlier this year.
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