According to Brandywine Global Investment Management, additional stimuli in China will have a significant impact on emerging markets, given the weakening of the U.S. dollar and the stabilization of demand for commodities. There is an expected shift in relative growth favoring China compared to the slowdown in the U.S. economy, which may put pressure on the U.S. dollar this year.
The improvement in economic growth in China also contributes to stabilizing the demand for commodities, which is seen as a positive signal for exporters in Latin America.
China continues to be a dominant theme in emerging markets, so it maintains an excess position in emerging market assets.
Inflation is one of the critically important variables for emerging markets in the next two years.
Additionally, it is assumed that central banks in countries with emerging markets and the ability to lower interest rates will not divert capital that is currently flowing toward emerging markets.
Experts believe these factors collectively contribute to a positive outlook for emerging markets and generate optimism among investors.
