S&P Global Ratings: Economic outlook for emerging markets in Q1’25

S&P Global Ratings has released its Economic Outlook for Emerging Markets for the first quarter of 2025, painting a cautious picture for the future. The report highlights the potential increase in trade protectionist policies among major economies, which could adversely impact GDP growth in most emerging markets. The magnitude of this impact will heavily depend on the specifics of these policies, which are expected to become clearer in the coming months. Elijah Oliveros-Rosen, the Chief Emerging Market Economist at S&P Global Ratings, sheds light on the various scenarios and potential consequences outlined in the report. Oliveros-Rosen discusses the likelihood of increased tariffs between the U.S. and China, which are anticipated to have repercussions on economies with significant exposure to Chinese demand such as Vietnam, Indonesia, Thailand, and Malaysia. While the impact on other emerging markets is projected to be relatively modest in the short term, uncertainty and volatility are expected to prevail as more information about these policies unfolds. Reflecting on the tariffs imposed in 2018, Oliveros-Rosen draws parallels to the potential effects of current and future trade tensions between the U.S. and China. He emphasizes three key channels through which these tariffs could impact emerging markets: global demand, trade dynamics, and financial conditions flow. The Chief Economist also addresses the debate surrounding the possibility of universal tariffs by the U.S., emphasizing the inherent uncertainties and potential ramifications of such a move. As a result of the anticipated trade disruptions, growth forecasts have been adjusted, particularly for China. While the U.S. is expected to maintain a growth rate of around 2 percent in the coming years, China's growth is forecasted to experience a significant decline, with estimates dropping to the low fours in 2025 and the high threes in 2026. Oliveros-Rosen also examines the potential implications for countries like South Africa, pointing out the level of exposure to Chinese exports and its potential impact on the country's GDP. Despite being considered moderately exposed, South Africa could still face challenges if Chinese growth falters as predicted. The interview concludes with a note of anticipation for the evolving landscape of emerging markets in the coming year, as policies take shape and their effects become more apparent.