Raise in emerging markets outlook

SOUTH AFRICA GROWING LESS THAN EXPECTED

MOODYS Investors Service revised its outlook on the world’s largest emerging market economies upward for 2016 and 2017, the ratings agency announced yesterday, pegging growth for G20 emerging markets at 4.4% this year and 5% for 2017.

Analysts at Moody’s said in a research note they expect growth in emerging markets to stabilise overall, but forecast increased growth for some countries and a turn lower for others.

Moody’s revised upwards its macro outlook for Brazil, Russia and China. Turkey and South Africa were seen growing less than previously expected.

“We’re seeing a certain amount of stabilisation ... capital flows seem to be back in a fairly strong way and across regions,” said Madhavi Bokil, Moody’s vice president and senior analyst.

“Relative to earlier in the year, financial market volatility has come down, and in the case of emerging markets in general we’re seeing some improvement.”

Moody’s expects Brazil to return to positive growth in 2017 after contracting 3.8% in 2015 and as much as 4% this year. Russia is expected to contract again this year, is seen growing up to 2% in 2017. Moody’s China’s GDP outlook was raised to 6.6% in 2016 and 6.3% in 2017.

The agency also noted the slower pace of the US Federal Reserve’s interest rate tightening cycle in 2016.

Moody’s did note, however, that it expects the Fed to resume its tightening cycle at the end of the year. –