Emerging markets 2024 outlook

Over the hump but elections and geopolitics breed volatility

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Executive summary│Emerging markets 2024 outlook

Over the hump but elections and geopolitics breed volatility

From “triple whammy” in 2023 to “over the hump” in 2024






Geopolitical shifts and countless looming elections challenge the EM outlook in 2024







We recommend a bottom-up approach





Wide-ranging EM regional heterogeneity in 2024






  • Throughout 2023, emerging markets (EM) have had to navigate the “triple whammy” of higher US interest rates, a strong US dollar and slower Chinese growth. For most of this year, they have weathered this storm with resilience and remarkably have even managed to eke out narrow sleeves of outperformance.
  • Heading into 2024, growth across the EM universe is set to stabilise as domestic fundamentals offset external drags, with some rotation from the largest to smaller EMs. Inflation and monetary policy rates are both “over the hump” – disinflation is progressing, and the decline in rates will continue and broaden in 2024. Such dynamics warrant admiration in the face of still restrictive interest rates, fiscal consolidation, tight global financial conditions and slowing developed markets (DM).


  • However, volatility abound. The observational equivalence on the path between two markedly different scenarios of a US soft landing and a US recession breeds fat tail risks for EMs in 2024.
  • Beyond this cyclical dimension that sets the tone, the operating environment is acutely fragile. The world is mired in three complicated wars – land (Russia-Ukraine), hot (Israel-Hamas) and cold (US-China) – that is threatening the lower cost comparative advantage globalisation model.
  • As if the current state of geopolitics was not enough to fuel uncertainty, we will also need to start considering the coming election bonanza, with no less than 17 elections in our EM coverage universe in 2024 – more than anything witnessed since 2004 (a year with only 9 elections). In a de-globalised era, this cycle may see less policy discipline than we have historically been accustomed to.


  • Looking ahead, a global environment marked by an unfavourable growth-inflation mix, higher for longer rates, low liquidity and a strong US dollar poses stark challenges to the top-down EM view.
  • This warrants a bottom-up approach. We believe that investors will be seeking one of the three “S’s” in their EM selection criteria – “strong” fundamentals, “structural” narratives and “sizable” risk premiums.


  • Across major EM jurisdictions, wide-ranging regional heterogeneity will be on display in 2024:
    • EM EMEA. Inflation dispersion, policy divergence and higher neutral rates.
    • EM Asia. Striking the policy put in China, whilst external tailwinds and domestic headwinds dominate the rest of the region.
    • Latin America. Reduce speed, maintain altitude but limited visibility ahead.

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