Emerging markets likely to see slowdown due to dependence on crude and trade: Wells Fargo

Paul Christopher, head of global market strategy at Wells Fargo Investment Institute, on Friday, said that the emerging markets may face twin blows this year. He elaborated on it, explaining that  emerging markets (EMs) will see a slowdown because of dependence on crude and trade. Additionally, he pointed out that dollar will strengthen this year, which can also impact EMs.

“There is really a mix of conditions for the emerging markets, but we think they will slow because of their dependence on crude oil, which we see going higher next year and because of their dependence on trade, where there is slowing in China, Europe and the US – the major markets slowing, and that is going to slow trade from countries like India. So not a recession, but a slowdown we think is inevitable,” Christopher told CNBC-TV18.

He further said, “We think the dollar strengthens considerably more this year on safe haven demand, especially as Europe falls into recession. If that happens, it's another pretty strong headwind for a lot of emerging markets. So slower, yes, but not probably a recession.”