March 2024 / VIDEO
Three key themes in emerging markets for 2024
Emerging markets are poised for a year of interest rate cuts in 2024.
Key Insights
- Falling inflation in emerging markets (EM) is paving the way for interest rate cuts in 2024.
- China's ability to support EM growth is more limited now, so developing countries will have to find new sources to drive economic growth in the future.
- EM external debt could benefit if frontier issuers are able to regain access to the international debt capital markets.
Transcript
Today, I’d like to talk to you about the emerging markets and the three themes that we see that are in store for 2024.
Theme 1
Inflation – coast is clear for more interest rate cuts.
Our first theme is inflation and, particularly, falling inflation paving the way for central banks to cut interest rates across the space. Over the course of 2022, inflation spiked in a number of countries, particularly in Latin America and Central and Eastern Europe. That inflation is falling quickly now, opening the way for central banks to cut interest rates aggressively.
Theme 2
Growth – China unlikely to be a growth engine for emerging markets.
Our second theme is growth. Over the past 10 to 15 years, the global economy has been very synchronized, and China has been a particular supporter of growth in a number of EM countries. However, going forward China's in the process of restructuring its economy in a multiyear basis, and its growth will no longer be as fast as it was in the past. As a result, China's ability to support emerging market growth is more limited, and they will have to turn to other sources of growth such as their own domestic demand or, perhaps, green energy to drive growth going forward.
Theme 3
Frontier markets – keep an eye out for signs of issuers regaining market access.
Our third and final theme is to keep an eye on frontier markets. A number of these countries lost market access in 2022 in the face of high developed market interest rates. We're seeing some of these countries start to return to debt capital markets. As a result, default fears are easing and that should support returns over the course of 2024.
Thanks for joining us today, and we look forward to sharing more insights with you in the future.
IMPORTANT INFORMATION
This material is being furnished for general informational purposes only. The material does not constitute or undertake to give advice of any nature, including fiduciary investment advice, and prospective investors are recommended to seek independent legal, financial and tax advice before making any investment decision. T. Rowe Price group of companies including T. Rowe Price Associates, Inc. and/or its affiliates receive revenue from T. Rowe Price investment products and services. Past performance is not a reliable indicator of future performance. The value of an investment and any income from it can go down as well as up. Investors may get back less than the amount invested.
The material does not constitute a distribution, an offer, an invitation, a personal or general recommendation or solicitation to sell or buy any securities in any jurisdiction or to conduct any particular investment activity. The material has not been reviewed by any regulatory authority in any jurisdiction.
Information and opinions presented have been obtained or derived from sources believed to be reliable and current; however, we cannot guarantee the sources' accuracy or completeness. There is no guarantee that any forecasts made will come to pass. The views contained herein are as of the date noted on the material and are subject to change without notice; these views may differ from those of other T. Rowe Price group companies and/or associates. Under no circumstances should the material, in whole or in part, be copied or redistributed without consent from T. Rowe Price.
The material is not intended for use by persons in jurisdictions which prohibit or restrict the distribution of the material and in certain countries the material is provided upon specific request.
It is not intended for distribution to retail investors in any jurisdiction.
USA—Issued in the USA by T. Rowe Price Associates, Inc., 100 East Pratt Street, Baltimore, MD, 21202, which is regulated by the U.S. Securities and Exchange Commission. For Institutional Investors only.
© 2024 T. Rowe Price. All rights reserved. T. ROWE PRICE, INVEST WITH CONFIDENCE, and the bighorn sheep design are, collectively and/or apart, trademarks or registered trademarks of T. Rowe Price Group, Inc.
Chris Kushlis is an emerging market sovereign analyst in the Fixed Income Division at T. Rowe Price. He is a vice president of T. Rowe Price Group, Inc. and T. Rowe Price International Ltd.
Mr. Kushlis has 15 years of investment experience, eight of which have been at T. Rowe Price. Prior to joining the firm in 2007, he was an advisor to the U.S. executive director at the International Monetary Fund.
Mr. Kushlis earned a B.A. from Middlebury College and an M.A. from the Johns Hopkins School of Advanced International Studies. He also has earned the Chartered Financial Analyst designation.