India to be an exception to struggling EMs, says Macquarie

MUMBAI: Emerging markets' reaction to a rate hike by the US Fed is likely to be short-lived and muted but the outlook for these economies in 2017 remains a struggle, said Macquarie in a report. It said that ongoing headwinds such as falling property values, credit down-cycle and falling foreign direct investment ( FDI) inflows are worrying and hence, the forecast is of an extended period of subdued growth in EMs.

However, India is a major exception to this assumption with positive factors such as favourable trends in FDI and progress on reforms, it added. “The ongoing structural reform push by policymakers will help improve the productivity dynamics and lay the foundation for sustainable growth,“ said Macquarie.

It said while India is better placed than others to external shocks related to rate normalising cycle by the US Fed and its fundamentals are strong in terms of macro stability, will not be immune due to the increase in global integration.