Emerging Markets 2026: The Next Phase Of Global Rebalancing

2025-12-16 10:36:00 ET

Macro | Protectionism, Policy Shifts, and the New Economic Reality

Emerging markets (EMs) are entering 2026 as a central force in the reordering of global growth. The combination of a softer U.S. dollar, moderating inflation, and stronger domestic fundamentals has created conditions for a more sustainable expansion across asset classes. Capital is rotating toward higher-quality companies and higher-yielding sovereigns, while policy realignment in China and other key economies is shifting the balance of global manufacturing, technology, and trade. Against this backdrop, we believe EMs are poised to play a defining role in the next phase of global rebalancing—where growth leadership broadens, diversification deepens, and structural change becomes the primary driver of returns.

Renewed focus on domestic economies spells better growth support in the United States and the European Union ((EU)). China’s domestic consumption will likely continue to struggle under the weight of the ongoing housing market correction. All in all, we believe a stable U.S. dollar, ample global liquidity, and strong demand for industrial commodities are likely to prove fertile ground for EM assets in 2026.

United States: Tariff Challenges Spur Policy Shifts

The U.S. economy is entering 2026 with narrow gross domestic product (GDP) growth, challenged consumer spending, and weaker corporate profits. And because of the recent government shutdown, economic data for the second half of the year is scant....

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