Emerging markets: From risky to resilient?

A deep dive on emerging markets by Franklin Templeton Fixed Income highlights how emerging markets may be becoming more resilient thanks to higher currency reserves.

Emerging markets- From risky to resilient


Over the past decade, sound policies, structural reform and strong growth have led to stark improvement among emerging markets (EM). When compared with the developed market (DM), it is evident that the gap in credit quality has narrowed. While DMs have seen a deterioration in their metrics since the COVID-19 pandemic, EMs have in most cases experienced superior growth rates, improving debt sustainability and strengthening fundamentals.

In this paper, we argue that the perceptions many investors have of EMs are typically neither accurate nor fair, especially for those investors less familiar with the asset class. In our analysis, EM fundamentals, in many cases, are superior to those of the DM world. Common preconceptions, which include riskiness, poor governance, high levels of corruption and unsustainable debt profiles, are inaccurate for most EMs.

You can now read the full whitepaper at the link below