Emerging markets (EM) have proven proficient in adapting to an ever-changing geopolitical and macroeconomic landscape and, despite the fears surrounding President Trump’s tariffs, have navigated the impact well. The diversification of the EM universe has proven a cushion for fixed income investors.
Supported by generally lower debt levels, both in sovereigns and corporates, continued strong growth and less dependency on the dollar and the US economic cycle, EM debt (EMD) has emerged as an attractive space for fixed income investors.
Turning the tariff table
Coming into 2025, the narrative was dominated by concerns over the impact of freshly inaugurated President Donald Trump’s tariff policy, with markets fearing it would dent EM trade and growth prospects. However, half a year since these policies were implemented on 1 April, so-called ‘Liberation Day’, EMs have demonstrated resilience. In fact, it is the US that appears to face the most notable growth risks and downward revisions, with the IMF’s April prediction for US growth in 2025 receiving a -0.9% downgrade since its January prediction, while EM growth was downgraded to a lesser extent, by -0.5%’.
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Supporting documents
Click link to download and view these filesChanging tides: how emerging market debt is adapting to a sea of change
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