'Double black swan' spells largest emerging market GDP decline on record

Coronavirus and oil price collapse lead to massive drop

Mike Sheen
clock • 5 min read
Capital Economics now warns that it expects aggregate EM GDP to fall by around 1.5% this year
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Capital Economics now warns that it expects aggregate EM GDP to fall by around 1.5% this year

Battered equity markets have led to investors eyeing some of the cheapest valuations in decades, but the "double black swan" events of the oil price collapse and the coronavirus pandemic are set to spell the first aggregate contraction in emerging market GDP since records began, research suggests.

While traditionally the world's driver of economic growth, governments across emerging markets have been forced to all but shut down their economies to fight the spread of the virus since the start of the year. As a result, Capital Economics now warns that it expects aggregate EM GDP to fall by around 1.5% this year, the worst downturn - and first contraction - since records began in 1951. For context, the weakest aggregate growth in emerging markets over the past 30 years was a 1.1% GDP increase in 1981, according to the International Monetary Fund, while 2019 growth was 3.9% bringin...

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