Emerging economies all around the world flexed their muscles in 2025. Contending adroitly with such a multitude of challenges as trade barriers thrown up by the United States. Even amidst geopolitical tensions and wars, these countries were able to uphold relative stability in their macroeconomic environments. As we look into 2026, we look forward with tempered optimism. All the available signs point to stabilization, if not outright consolidation, being just around the corner.
In 2025, the protectionist shock from the U.S. was still doing long-term damage to global trade. Emerging economies demonstrated their ability to weather this storm. At the same time, the adverse effects of these shocks on global trade were smaller than anticipated. This result provided economies with plenty of time to adjust, readjust and absorb the shocks. Chinese exports fueled this dynamic, and Chinese exports were extraordinary performers. Their success immensely sharpened the collective resilience and acuteness of emerging markets.
Second, monetary policy – especially easing – played a big part in why this resilience occurred. Nonetheless, central banks in many emerging economies continued to pursue pro-growth strategies in the face of falling oil prices and in the midst of structural disinflation. As inflationary pressures subsided, these countries took advantage of the window provided. They acted aggressively to create a climate conducive to economic activity and investment.
Economic indicators and surveys released for the second half of 2025 were all signaling a rosy picture, particularly for the emerging economies. The most recent GDP estimates suggest that stabilization is indeed possible. Many analysts have been optimistic about additional signs of consolidation — signs that will make the economic prospects even brighter. Financing conditions stayed favorable throughout the spring and summer months, enabling continued investment and positive momentum.
Perhaps the most salient point, nearly all currencies in emerging market countries appreciated against the US dollar. This structural trend reflected more robust economic fundamentals. As a side benefit, it pulled down inflation rates within each of these nations. The external and domestic financing conditions were very favorable at least until mid-2025, providing an ambient environment to grow the economy.
Asia turned out to be one of the most energetic regions in 2026 and was forecasted to remain that way, with strong growth projected. Still, given the adjustments emerging economies have to make to a new global reality, a further growth slowdown is still the most likely scenario for emerging economies. Though challenges remain, if these economies continue to demonstrate their resiliency and capacity to evolve, there may be better stability in the future.