Emerging markets' outlook: Subdued growth not bad news
IN our view, stabilising but still subpar global growth will reign in 2020. Our baseline scenario envisions a global economic backdrop only marginally better than in 2019, thus leaving global monetary policy accommodation largely in place.
We expect EM fixed income to deliver more subdued returns relative to last year, given our views on current valuations and limited scope for aggressive monetary policy accommodation in the developed world.
In local rates, the most attractive opportunities are in countries displaying disinflationary or stable inflation dynamics, and offering generous real rates. Emerging market currencies, relative laggards versus the US dollar in 2019, could also offer value.
