S&P Global Ratings decreased its GDP forecasts for most emerging markets, saying that overall emerging markets' growth will be the weakest in a decade at 4.4% in 2019 amid trade frictions and domestic policy uncertainties in some cases.
China's GDP is projected to grow 6.2% in 2019, unchanged from prior forecasts, and 5.8% in 2020, down from the previous projection of 6.2%. India is expected to grow at 6.3% in 2019 and 7.0% in 2020, below the previous estimates of 7.1% and 7.4%, respectively.
The rating agency cut GDP growth forecasts for the majority of Latin American countries, most notably for Argentina and Mexico. Argentina's economic contraction is now expected to continue through 2020, while Mexico is projected to grow 0.4% and 1.3% in 2019 and 2020, respectively, lower than prior estimates.
S&P Global Ratings expects Saudi Arabia's real GDP to now contract about 0.4% this year, compared to the growth Ratings had expected, driven mainly by a fall in oil production because of an OPEC deal and the attacks on oil facilities in September. The rating agency expects GDP growth to rebound to 3.1% in 2020.
Turkey's economy is expected to contract 0.5% in 2019, unchanged from prior estimates, and grow 2.9% in 2020, lower than the prior projection for 2020.
Rising geopolitical tensions, trade disputes and increased capital market volatility mean that central banks will likely remain highly accommodative for the rest of 2019 and into 2020. "This should support capital flows into emerging markets and provide room for monetary easing in several of those economies," S&P Global Ratings said.
However, despite low interest rates, companies are hesitant to raise their capital expenditure amid low investor and business confidence.