Emerging market (EM) countries will start 2025 on a stronger fundamental footing. On whole, EM growth has been resilient, while inflation has fallen closer to normal levels. External accounts are in a good position, with limited balance of payments pressures and rising foreign reserves. EM countries have been rewarded by rating agencies: two-thirds of EM credit rating actions in 2024 were upgrades, the most positive trend since the 2020 pandemic. EM corporates have managed their balance sheets well, with net leverage levels holding below US peers. China’s slowdown has not weighed heavily on other EM countries, and we see strong growth prospects in India, Indonesia, Saudi Arabia, Brazil, and other large countries, that are picking up the slack.
