The world at a glance

Sources: International Monetary Fund World Economic Outlook database, October 2022; Morgan Stanley Capital International (MSCI), as of September 30, 2022; and Bank for International Settlements, as of March 31, 2022. Emerging markets includes frontier markets. Purchasing power parity (PPP) is a theory which states that exchange rates between currencies are in equilibrium when their purchasing power is the same in each of the two countries. Stock capitalization is based on country weightings in the MSCI All Country World Index. MSCI All Country World Index is a free float-adjusted market capitalization weighted index that is designed to measure the equity market performance of 23 developed and 23 emerging markets. An index is unmanaged and not available for direct investment. Investing in stocks involves risk and their returns and risk levels can vary depending on prevailing market and economic conditions. Foreign investing has additional risks including currency, transaction, volatility and political and regulatory uncertainty. These risks are heightened in emerging and frontier markets. Bonds are subject to market, interest rate, price, credit/default, liquidity, inflation and other risks. Prices tend to be inversely affected by changes in interest rates.

MSCI makes no express or implied warranties or representations and shall have no liability whatsoever with respect to any MSCI data contained herein. The MSCI data may not be further redistributed or used as a basis for other indexes or any securities or financial products. This report is not approved, reviewed, or produced by MSCI.

Key Takeaways

  • Emerging markets’ demographic advantage underscores their growth potential, likely to reassert itself once global shocks subside. Their relatively small global stock capitalization creates the potential for capital market growth and development.
  • Aggressive bond issuance by emerging markets, responding to historically low interest rates and to earlier U.S. dollar weakness, has expanded their market share. However, recent poor performance highlights their vulnerability to rising interest rates, less ample credit, and to a strengthening dollar.