AgenciesMUMBAI: Emerging economies including India could surprise the global investors and would see growth returning as they recover fast from Covid pandemic, a Morgan Stanley research report has said.
The report said that while many global investors are less optimistic about investing in emerging economies due to the high number of Covid cases, the statistics have to be seen more closely.
“Domestically, emerging markets have been hit by a less aggressive Covid challenge. East Asia economies have had better public health management and have been able to limit the outbreaks and economic activity is well on their path towards normalization, if not already. The rest of the large emerging markets – like India, Brazil and Indonesia – have had much lower fatality rates compared with developed markets. Consequently, most emerging markets have been able to reopen their economies to a larger extent as compared with developing markets,” the research report said.
As per the report, several global investors have expressed their concerns around Covid pandemic and emerging countries. The report said that many investors are of the view that the problems that emerging economies face are structural in nature.
However, we are of the view that these challenges have been more cyclical and exogenous in nature. It was the case that these shocks (for example, commodity price shocks, trade tensions and now Covid-19) have happened in quick succession, and had compounded the challenges that EMs have been facing,” the report added.
The report pointed out that emerging economies have managed macro economics better than many developed economies.
Most emerging markets have both their inflation and current account deficit at a comfortable level. This allowed EM central banks the room to ease earlier this year and that they will be able to continue to pursue extremely accommodative monetary policies. In turn, these accommodative policies will provide a conducive, the research report added.
The report said that while many global investors are less optimistic about investing in emerging economies due to the high number of Covid cases, the statistics have to be seen more closely.
“Domestically, emerging markets have been hit by a less aggressive Covid challenge. East Asia economies have had better public health management and have been able to limit the outbreaks and economic activity is well on their path towards normalization, if not already. The rest of the large emerging markets – like India, Brazil and Indonesia – have had much lower fatality rates compared with developed markets. Consequently, most emerging markets have been able to reopen their economies to a larger extent as compared with developing markets,” the research report said.
As per the report, several global investors have expressed their concerns around Covid pandemic and emerging countries. The report said that many investors are of the view that the problems that emerging economies face are structural in nature.
However, we are of the view that these challenges have been more cyclical and exogenous in nature. It was the case that these shocks (for example, commodity price shocks, trade tensions and now Covid-19) have happened in quick succession, and had compounded the challenges that EMs have been facing,” the report added.
The report pointed out that emerging economies have managed macro economics better than many developed economies.
Most emerging markets have both their inflation and current account deficit at a comfortable level. This allowed EM central banks the room to ease earlier this year and that they will be able to continue to pursue extremely accommodative monetary policies. In turn, these accommodative policies will provide a conducive, the research report added.
Read More News on
Download The Economic Times News App to get Daily Market Updates & Live Business News.