China vs. India
Cyclical downturn phase
Growth premium in favour of EM
In an environment of weak global demand, Emerging Markets (EM) are likely to soon enter a cyclical downturn phase. Despite China’s pronounced deceleration and a tighter policy mix across the board, EM as a whole has displayed remarkable resilience, with GDP growth for 2023 being repeatedly revised upward.
Real GDP growth (annual percent change)
Foreign Direct Investments
The growth premium in favour of Emerging Markets over Developed Markets is projected to continue widening. Asia is set to register the strongest contribution to world GDP once again.
Growth premium in favour of EM
China vs. India
Cyclical downturn phase
Source: Amundi Institute. Data and forecasts are as of 31 October 2023 .
Source: Amundi Investment Institute on Unctad FDI World data. Annual data as of end-2021. Right chart shows growth in Foreign Direct Investments for selected EM countries.
3 Themes to Watch for in Emerging Market in 2024
Source: Amundi Investment Institute. Data is as of 25 October 2023. Forecasts are by Amundi Investment Institute as of 24 October 2023.
For China, the economy is projected to end 2023 with a growth rate just over 5%. Mini monetary easing will persist, with a 20bp rate cut likely in H2 2024. This easing, however, is not enough to offset the drag from real estate and the new local debt discipline. We expect China's economy to grow just below 4% in 2024.
China: a new growth trajectory
For India, while mildly decelerating, with GDP expected to grow at 6.5% in 2023 and at 6.0% in 2024, India’s economic prospects remain bright and will remain supported by mainly domestic demand. The fiscal consolidation path is expected to advance at a very gradual pace – with the fiscal deficit at 4.5% of GDP by fiscal year (FY) 26 from 5.8% in FY24 – and the expenditure tilt should remain biased to capital expenditure in the context of an unchanged political landscape.
India: an emerging power
Source: Amundi Investment Institute, Ministry of Finance, Bloomberg Economics. Data is as of October 2023.