Emerging - OECD Outlook
The latest OECD interim economic outlook presents a mixed but largely favourable picture for emerging markets, even as it warns of a global slowdown in the latter half of the year. The report highlights that global growth was more resilient than expected in the first six months of 2025, largely driven by the strong performance of emerging-market economies. The global GDP growth forecast for 2025 was consequently revised upwards to 3.2%, from the 2.9% predicted in June, although the outlook for 2026 remains unchanged at 2.9%.
This short-term resilience was partly attributed to businesses "front-loading" industrial production and trade ahead of anticipated tariff hikes. The OECD also noted that strong investment in AI and fiscal support in China helped to bolster this positive outcome.
Looking beyond these immediate factors, emerging markets are seen as increasingly resilient in the longer term. Many have implemented structural reforms and demonstrated greater fiscal discipline since the pandemic, which has led to an improving economic outlook and, in some cases, a strengthening of their currencies. These economies are also well-positioned to capitalise on global shifts, such as the transition to renewable energy and the growth of AI, with some emerging as leaders in these critical sectors.
The outlook for a number of key countries within these markets is particularly positive, and worth noting given their positioning in the EPIC Fixed Income portfolios. In the Middle East, particularly the Gulf Cooperation Council (GCC) countries, a strong outlook is driven by successful economic diversification away from oil. Abu Dhabi is benefiting from heavy investments in sectors like tourism, finance, and technology, which are now serving as primary engines of growth. In Latin America, the outlook for both Mexico and Chile has been revised upwards. Mexico's economy is forecast to grow by 0.8% in 2025, with its resilient export sector holding up better than expected despite trade uncertainty. Chile is also on a path of resilient growth, with a projected expansion of 2.4% in both 2025 and 2026, underpinned by strong household consumption, rising business confidence, and prudent fiscal policy.
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