Emerging markets soon-to-be back in vogue

For over a decade, the narrative around emerging markets has been one of disappointment. Once hailed as the future growth engines of the global economy, many emerging nations now find themselves trailing behind the developed world, particularly the United States.

As China’s meteoric rise has slowed and global commodity prices have declined, many of these developing nations have faced economic stagnation or even regression. Simultaneously, the US economy, bolstered by record-breaking gains in its technology sector, has retaken center stage in the global markets.

However, now on the brink of a new global economic cycle, the tide is shifting once again in emerging markets’ favor. Savvy investors are beginning to see the resurgence of emerging markets — a shift this writer believes shouldn’t be ignored or missed.

The next five years hold immense promise for the emerging world. One recent analysis shows that the percentage of emerging markets poised to outpace the United States in per capita GDP growth is expected to surge to nearly 90%, a level not seen since the early 2000s.

What makes this resurgence so compelling isn’t just the pace of growth but the underlying financial health of many of these economies. Unlike in the 2000s, when the emerging world was largely buoyed by China’s rise and a commodity supercycle, today’s revival is arguably built on stronger economic fundamentals.

The groundwork for this comeback lies in a series of prudent economic policies adopted by many emerging markets over the past decade. Nations that were once plagued by financial instability, such as Argentina and Turkey, are now embracing reform.

Gone are the days of excessive government spending and unsustainable debt accumulation. Instead,