LONDON (Reuters) – Swiss bank UBS has joined a growing band of investment houses forecasting that emerging markets will see a bumper bounce next year after their torrid 2022.
UBS’ analysts published a note on Tuesday predicting 8-12% returns in emerging market equities in 2023 and a 2-3% rise in emerging currencies citing expectations for interest rate pressures to reduce and China easing its COVID containment restrictions in the second quarter of the year.
They also project +10-15% returns in the mainly dollar-denominated emerging market hard currency debt indexes and +8-12% in big the local currency debt indexes.
Aside from the extreme shocks of 2009 and 2020, the 2.1% global GDP growth that UBS projects for 2023 would be the slowest in 30 years and the 8th weakest since 1969.
“As U.S. inflation further moderates and China cyclically recovers from Q2, we expect volatility to decline across EM assets,” UBS said.
(Reporting by Marc Jones, editing by Karin Strohecker)