Strategy Note /

IMF's updated economic forecasts across emerging markets

  • IMF's global GDP growth forecast for 2022 cut by 80bp to 3.6%, versus Jan 2022, due to fallout from Russia-Ukraine War

  • Inflation forecasts increased: eg oil price (Brent US$/b) assumption for 2022, 2023, 2024 to 111, 96, 87 from 66, 63, 61

  • We chart the biggest changes in growth, inflation, fiscal and current account deficits in emerging markets

IMF's updated economic forecasts across emerging markets
Hasnain Malik
Hasnain Malik

Strategy & Head of Equity Research

Tellimer Research
20 April 2022
Published byTellimer Research

The IMF has cut its 2022 real global GDP growth forecast by 80bp to 3.6%, mainly due the fallout from the ongoing Russia-Ukraine War. This follows the 50bp cut in January 2022.

Global growth is forecast to stagnate in 2023, at 3.6% again, ie a lower growth rate compared to the previous forecast (3.8%), and from a lower base.

Faster and accelerating growth is forecast in EM across 2022 and 2023 (3.8% and 4.4%, respectively) compared to DM (3.3% and 2.4%), but that is little comfort given the cuts across most individual EM countries.

Of course, updates to the IMF World Economic Outlook tend to confirm what we already know at a global and country level, understandable given the scale of the forecasting exercise, but it is still worth sifting through the country-specific data to see where the biggest changes are.

Our equity strategy view remains that, in the context of uneven, stuttering growth across EM, and a greater emphasis on country, sector and stock selection, a mix of tech, commodities, tourism, and manufacturing exposure is warranted — filtered by valuation that is cheap relative to history and ruling out dysfunctional currency and, obviously, sanctioned markets.


IMF growth forecasts changes reflect Russia-Ukraine War and its impact on commodity prices

In general, across all countries, 2022 downgrades are more common than upgrades.

Growth upgrades — There are significant 2022 growth forecast upgrades in several EM commodity exporters, excluding Russia and Ukraine; eg GCC oil exporters such as Kuwait, Oman, and Saudi see a 2-3pp increase, Nigeria a 70bp increase, and Brazil a 50bp increase.

Growth downgrades — Russia growth forecast is cut 11pp and 4pp for 2022 and 2023, respectively. Chile and Peru see growth for both years cut by 1pp or more, presenting an exception to the wider upgrade for commodity exporters. Most countries that have manufacturing and tourism exposure, eg Thailand and Vietnam, are commodity importers, eg India, or are situated in East Europe, eg Poland and Romania, have been downgraded.


IMF inflation forecasts up on commodity price pass-through

Inflation stress — Most EM country inflation forecasts are higher, driven by higher commodity prices, eg the US$pb Brent oil price assumption has almost doubled for 2022 from 66 to 111. The largest increases are seen where large currency devaluation has occurred or where a dysfunctional currency regime prevails, eg Russia, Sri Lanka, Turkey, and Zimbabwe.

Fiscal balance

IMF fiscal balance forecasts reflect slower growth (lower tax revenue) for most and commodity windfall for others

Current account balance

IMF current account balance forecasts reflect net commodity export exposure

Related reading

Emerging-Frontier Equity Monthly - March: Roaring commodities meet rising rates, Mar 2022

IMF's updated growth forecasts across emerging markets, Jan 2022

IMF's updated economic forecasts across emerging markets, Oct 2021