New data from the IMF suggests an easing in emerging market growth as a whole, but variances remain between individual countries, says Eaton Vance.
In its most recent outlook, the IMF updated its forecasts for both developed markets, downgraded by 0.1 per cent for 2016 and 2017, and emerging markets, up 0.1 per cent in 2016 and holding steady at 4.6 per cent for 2017, Eaton Vance noted.
“There were a number of downward revisions that masked some bright spots in Georgia and Serbia, which both had upgrades higher than 0.5 per cent,” the company said.
Georgia’s ambitious global tax reforms and high level of foreign direct investment were given by Eaton Vance as drivers, and IMF supported initiatives to move Serbia’s economy “away from the old communist system” had likewise helped the county’s outlook improve.
Eaton Vance cautioned however that other countries, such as South Africa and Nigeria, received significant downgrades to their forecasts.
“Nigeria had a whopping 2.8 per cent downward revision to the country's 2017 growth forecast, to set it at a mere 0.6 per cent,” the company said.
“Nigeria has been hobbled by its dismal response to lower commodity prices, overvalued currency, capital controls and import restrictions; these have damaged growth prospects that were among the most promising on the continent just a short time ago."
Opinions of emerging markets at IMF’s recent annual meeting were mixed, Eaton Vance said, describing the mood at the event as “not exuberant, but not overly pessimistic”, though interest in emerging market countries remained high.
Eaton Vance said the IMF’s results reinforced the importance for investors of fundamental country analysis for emerging markets.