Emerging economies have faced a backlash in the last few months as a consequence of the global economic weakness and the uncertainty related to global trade. This weighed on the performance of EM equities in the third quarter, although they recovered somewhat in September. EM debt proved more resilient, supported by investors’ appetite for yield. Idiosyncratic events (Argentina, Saudi Arabia and Turkey, to name a few) also impacted the overall more fragile environment for EM.

As a consequence, we have revised down our EM GDP growth forecast to 4.2% in 2019 and 4.4% in 2020, from 4.3% and 4.5%, respectively, with significant country divergences.