S&P Global — 21 October 2024
Daily Update: October 21, 2024
Emerging Markets Clamber for Growth
By Nathan Hunt
Start every business day with our analyses of the most pressing developments affecting markets today, alongside a curated selection of our latest and most important insights on the global economy
The hardest bridge for any economy to cross is the one spanning the divide between emerging and developed markets. In the 1990s, South Korea rode a favorable economic environment and liberalized trade policies to become a developed market. According to some economists, China has also managed to cross that chasm. But for every South Korea, there is a country like Mexico that struggles on the wrong side of the divide. Some emerging markets, such as Malaysia, Thailand and the Philippines, look to duplicate the South Korean model. Other larger emerging markets, such as India, Indonesia and Brazil, look toward the Chinese model of growth.
Last week, S&P Global published its latest Look Forward report, “Emerging Markets: A Decisive Decade,” examining emerging economies from varied perspectives. One article in that report looked at the emerging markets that will climb the income ladder. While income growth in the global economy is not a zero-sum game, many countries are pursuing similar paths to growth, meaning they will end up competing for manufacturing jobs and trade relationships.
The good news is that the top-heavy prosperity of the post-World War II global order is starting to erode. The combined GDP of the 10 largest emerging markets is approaching that of the 10 largest developed markets. By 2030, they will be close to parity. However, the vast populations of many emerging economies mean that equal shares of GDP do not translate into equal income per capita. By 2030, the average income in the 10 largest emerging markets will be one-third that of the 10 largest developed markets.
Lower income growth creates a risk of political instability as domestic workers grow weary of unmet expectations. To achieve income growth, productivity must grow alongside GDP. This can be achieved through education, trade and capital liberalization. Countries that are well suited to supply metals and minerals required for the energy transition, such as Indonesia, Chile and the Philippines, will have an advantage in achieving income growth.
Governments of emerging economies are not sitting passively. Another article in the report, “Planning for the future: Growth targets for the next decade,” looks at how growth targets in South Africa, Saudi Arabia and Malaysia are influencing government policies with varying levels of success.
Saudi Arabia has focused on attracting international investment and regional offices of multinational corporations to diversify and grow its economy. Malaysia is focused on upskilling workers to achieve its ambitious growth targets. Meanwhile, South Africa, despite its economic promise, is on course to fall short of its 2030 growth targets.
Analysts at S&P Global anticipate increasing divergence in terms of emerging markets’ performance over the next decade. Factors affecting that divergence include market potential, policy favorability, institutional quality, logistics efficiency and resource availability.
Today is Monday, October 21, 2024, and here is today’s essential intelligence.
Ahead Of COP16, Corporate Nature Commitments Remain Rare
Corporate commitments to protecting biodiversity and halting deforestation have risen since the signing of the Global Biodiversity Framework in 2022 but remain extremely rare, according to S&P Global Sustainable1 data. Latin America is the region with the highest share of companies making these commitments. Colombia, the host of the UN’s COP16 biodiversity conference, is the global leader in corporate commitments on biodiversity and deforestation.
—Read the article from S&P Global Sustainable1
Emerging Markets Monthly Highlights: Navigating Risks Amid Fed Easing
Escalation in the Middle East conflict could drive oil prices higher, impacting EMs more severely than advanced economies due to energy's larger share in their consumption basket. If oil prices take another leg higher, this could likely delay interest rate normalization in some EMs. China’s stimulus measures, including monetary easing and property market support, aim to boost sentiment and growth. However, weak credit demand limits their impact, with growth prospects hinging on the extent of additional fiscal stimulus.
—Read the article from S&P Global Ratings
September US Retail Sales Beat Expectations As Default Risk Ticks Lower
Shoppers spent more than expected at retailers, bars and restaurants in September in a possible sign that cooling inflation is encouraging price-wary consumers to spend. Retail and food services sales grew 0.4% in September from the previous month, according to advance estimates reported Oct. 17 by the US Census Bureau. This was an acceleration from a revised 0.1% monthly gain in August and beat economist expectations of a 0.3% rise in September, according to estimates compiled by Econoday.
—Read the article from S&P Global Market Intelligence
Libyan Oil Exports Return To Normal Levels As Sharara Crude Flows Restart
Libya's crude exports recovered to normal levels in the week to Oct. 16, according to tanker tracking data, as flows from a key western port finally restarted following the resolution of a feud between Libya's rival regional authorities. Export loadings of Libya's light, sweet crudes averaged 1.03 million b/d in the seven days to Oct. 1, on par with average crude export levels during the first half of the year, according to data from S&P Global Commodities at Sea.
—Read the article from S&P Global Commodity Insights
IEA Sees Oil Supply 'Overhang' Emerging After Cutting Long-Term Demand Projection
Global oil demand will decline faster than expected in the coming decades — creating a likely supply surplus — as electric vehicles continue to erode oil use in road transport, while biofuels and hydrogen deflate the need for oil in the aviation and shipping sectors, the International Energy Agency said Oct. 16 in its latest long-term energy outlook. After increasing by about 2.6 million b/d from 2023-30, global oil demand will peak by 2030 as rising sales of EVs and higher fuel efficiency will lead to petrochemicals surpassing road transport as the main contributor to oil demand growth, the IEA said in its closely watched World Energy Outlook 2024.
—Read the article from S&P Global Commodity Insights
Fuel For Thought: 2024 Presidential Election: Impacts On The US Auto Industry
In this special episode of Fuel for Thought, we’re diving into the 2024 US presidential election – one of the most consequential elections in US history – which could reshape the future of the automotive ecosystem. Our panelists cover the wide range of issues on the table – including environmental regulations, trade policies, and labor dynamics – as well as the impacts these issues could have on automakers, suppliers, and consumers alike.
—Listen and subscribe to the podcast from S&P Global Mobility
Webinar: Sustainable Evolution In New Age Vehicle Manufacturing - A Drive Towards A Greener Economy (Nov. 7, 2024)
Join us in this webinar to hear about the evolution of trends in manufacturing technologies for vehicles. We will focus on the rapid shift to Battery Electric Vehicles (BEVs) and how Original Equipment Manufacturers (OEMs) have developed new processes within production to accommodate this shift. These new processes have a direct impact on the overall profit per vehicle.
—Register for the webinar from S&P Global Mobility