Fitch cuts medium-term potential growth estimate for 10 EMs to 4%

This is down from 4.3 per cent in the rating agency’s previous assessment in 2021.

The reduction is primarily due to a large reduction of 0.7 percentage points (pp) to the estimate of China’s supply-side growth potential.

Average EM10 potential growth on an unweighted basis remains unchanged at 3 per cent, reflecting upward revisions elsewhere, Fitch Ratings said in a release.

The rating agency has cut the estimate for China to 4.6 per cent from 5.3 per cent, for Russia to 0.8 per cent from 1.6 per cent, for Korea to 2.1 per cent from 2.3 per cent and for South Africa to 1.0 per cent from 1.2 per cent.

However, it has made large upgrades to India and Mexico, with the latter benefitting from a much better outlook for the capital to labour ratio. India’s estimate is higher at 6.2 per cent from 5.5 per cent and Mexico’s at 2.0 per cent from 1.4 per cent.

It has revised the estimate for Poland to 3 per cent from 2.6 per cent, that for Turkiye to 4.1 per cent from 3.9 per cent, that for Brazil to 1.7 per cent from 1.5 per cent and that for Indonesia to 4.9 per cent from 4.7 per cent.

ALCHEMPro News Desk (DS)