Emerging markets will grow at 7.4% on an average in 2021: Morgan Stanley

While initially constrained by a later and in some cases more severe outbreak of COVID-19, and a lack of fiscal space, emerging markets excluding China (EMXC) have seen a rapid improvement in growth momentum in recent months.

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Emerging markets including countries such as India would witness a fast pace of economic growth averaging at 7.4% in 2021, a Morgan Stanley research report has said.
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Mumbai: Emerging markets including countries such as India would witness a fast pace of economic growth averaging at 7.4% in 2021, a Morgan Stanley research report has said.

The report said that the growth would be mainly due to five factors. These include, lower risk of broad-based lockdowns in most key emerging markets, additional acceleration in growth as a vaccine becomes available from January 2021, rising support for external demand from developed markets, against a backdrop of a widening US current account, low US rates, a weak US dollar and rising commodity prices. Lastly China’s growth impulse and the lagged effects of emerging market monetary easing and liquidity provisions.

While initially constrained by a later and in some cases more severe outbreak of COVID-19, and a lack of fiscal space, emerging markets excluding China (EMXC) have seen a rapid improvement in growth momentum in recent months. As we have been highlighting, manufacturing PMIs for the group as a whole moved back into expansion territory in August, industrial production turned positive on a year on year basis in September, and services PMIs have caught up with DMs in October. In the near term, even as developed markets growth slows in December quarter due to a tightening of restrictions, we expect EM growth to stay on the improvement path, as more favourable trends in the COVID-19 outbreak will mean a lower risk of strict lockdown measures, the Morgan Stanley report added.

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