War in Ukraine, inflation, energy prices, interest rate hikes, the aftermath of China’s zero-covid policy, and supply disruptions have joined rank with monetary tightening. In 2022, global markets entered into a low-growth, low-return environment.
Growth in emerging economies is expected to decrease with 50 per cent. As these markets have entered into bear territory, their outlook remains tied to global economic stagflation, and to central banks in developed countries being able to bring inflation under control without engineering a recession. Increased geopolitical risk puts further constraints on economic growth in emerging economies.
When global markets are showing low growth and low returns, income-producing assets become superior to capital appreciation. With emerging economies’ fundamentals in a relatively solid position, carefully selected investment opportunities continue to offer attractive relative growth as well as income.
