Emerging economies in 2026: Cautious optimism

In 2025, emerging economies successfully navigated various shocks, including US protectionism, conflicts, and geopolitical tensions, largely due to Chinese exports, monetary easing, and ongoing disinflation against a backdrop of falling oil prices. Overall, financing conditions remained favorable, at least during the first half of the year, with most currencies appreciating against the dollar. In addition, macroeconomic imbalances, particularly external ones, were kept in check. For 2026, a slowdown in growth is the most likely scenario, but stabilization or even consolidation cannot be ruled out. Asia is expected to remain the most dynamic region.

In 2025, emerging economies demonstrated resilience in face of the protectionist shock initiated by the United States, the ongoing conflict between Russia and Ukraine, as well as military and geopolitical tensions in the Middle East and Asia. The primary factors contributing to this resilience include the significantly less adverse impact of these shocks on global trade – as illustrated by the robust performance of Chinese exports – the easing of monetary policy, and ongoing disinflation against a backdrop of falling oil prices. Overall, external and domestic financing conditions remained favorable at least until mid-2025, with the vast majority of currencies appreciating against the dollar in the second half of the year, which contributed to a reduction in inflation. More fundamentally, macroeconomic imbalances, particularly external ones, are limited, and the credit risks faced by are largely under control.

For 2026, a continued slowdown in growth in these countries is still the preferred scenario. However, GDP estimates and the economic indicators and surveys available for the second half of 2025 provide optimism for stabilization or even consolidation. Furthermore, the oil and gas markets are fundamentally in surplus. Moderate hydrocarbon prices are expected to mitigate inflationary pressures, thereby extending the cycle of monetary easing for a bit longer. At the same time, fiscal policies are expected to be only moderately restrictive. Finally, both external and domestic financing conditions are expected to remain favorable.

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