VWO - IMF: Emerging markets will help limit global growth slowdown

2023-07-26 09:41:13 ET

The International Monetary Fund said Tuesday that while it still sees moderating global economic growth in 2023, the slowdown will not be as dramatic as it had initially feared, with inflation coming down quicker than previously thought and expansion in developing countries providing a boost.

“Under our baseline forecast growth will slow from last year’s 3.5 percent to 3 percent this year and next, a 0.2 percentage points upgrade for 2023 from our April projections. Global inflation is projected to decline from 8.7 percent last year to 6.8 percent this year, a 0.2 percentage point downward revision, and 5.2 percent in 2024,” Pierre-Olivier Gourinchas the Economic Counsellor and the Director of Research at the IMF said in the IMF’s world economic outlook report .

The report also outlined that the slowdown in growth will be concentrated in more advanced economies where it's predicted that growth will fall from 2.7% in 2022 to 1.5% in 2023 as well as also remaining subdued at 1.4% in 2024.

In contrast, the IMF says that growth in emerging markets is anticipated to move up in 2023 with growth advancing to 4.1% next year. See below a visual chart provided by the IMF.

Reviewing the progress of the last couple years, the IMF noted that the global economy has made strides over the past year and a half, recovering from both the COVID-19 pandemic and the Russian invasion of Ukraine.

For market participants wanting to further analyze the emerging market segment, see below a handful of large-scale EM-focused exchange traded funds:

• Vanguard FTSE Emerging Markets ETF ( NYSEARCA: VWO )
• iShares Core MSCI Emerging Markets ETF ( NYSEARCA: IEMG )
• iShares MSCI Emerging Markets ETF ( NYSEARCA: EEM )
• Schwab Emerging Markets Equity ETF ( NYSEARCA: SCHE )
• SPDR Portfolio Emerging Markets ETF ( SPEM )

Year-to-date price action: VWO +7.1% , IEMG +9.1% , EEM +7.8% , SCHE +6.9% , and SPEM +6.9% .

At the same time, for a more broader global stance position investors may look towards the following funds:

• Vanguard Total Stock Market Index ( VTI )
• S&P 500 ETF Trust ( SPY )
• iShares Core S&P 500 ETF ( IVV )
• Vanguard S&P 500 ETF ( VOO )

Year-to-date price action: VTI +18.9% , SPY +19.4% , VOO +19.4% , and IVV +19.4% .

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