The easing global financial conditions bode extremely well for India, said Jahangir Aziz, Global Head-EM Economics at JPMorgan, as he pointed out the huge potential for inflows into emerging markets (EMs) in 2024.
EMs have shown exemplary resilience in navigating major economic shocks in 2022 and 2023 but are currently under-owned, he noted.
"If you have that low ownership of emerging market assets, on one hand, you get the resilience, and then to add on to it, that the US will have a soft landing....it doesn't really matter the timing of it...but that is going to happen there. I think this is going to be one of the strongest years emerging market has seen in a long, long time," he said.
Supporting this view, Steven Englander, Global Head of G10 FX Research at Standard Chartered, added that a soft currency coupled with a recovering or firm economy makes emerging markets attractive for investors. He noted, "There will be flows into emerging markets and into G10."
Aziz believes the Reserve Bank of India (RBI), just like the other Asian banks, will wait and watch whether the US Federal Reserve actually starts cutting rates and whether this is the beginning of a reasonably long easing cycle before taking any rate actions.
(Edited by : Shweta Mungre)
