2020 Outlook: Emerging Markets Debt

Timely insights from portfolio managers and industry experts on key financial, economic and political issues.

The views expressed in these posts are those of the authors and are current only through the date stated. These views are subject to change at any time based upon market or other conditions, and Eaton Vance disclaims any responsibility to update such views. These views may not be relied upon as investment advice and, because investment decisions for Eaton Vance are based on many factors, may not be relied upon as an indication of trading intent on behalf of any Eaton Vance strategy. The discussion herein is general in nature and is provided for informational purposes only. There is no guarantee as to its accuracy or completeness.

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      By Michael A. Cirami, CFACo-Director of Global Income, Eaton Vance Management

      Boston - Here in 2020 and as we look forward, we're constructive on the asset class — despite the strong rally last year.


      When you peel back the layers of performance in emerging market debt, there was a lot of differentiation in 2019. And we think that there will be similar opportunities in 2020.

      Disinflationary process, not inflationary pressures

      There's been a great disinflationary process that's gone on globally in the developed world and in the emerging market world as well. We continue to believe that this is going to play out in 2020, so we don't see a lot of inflationary pressures in emerging markets.

      At the same time, we've seen structural improvements in policymaking at central banks in many places.

      Look for structural not just cyclical change

      While we've had 10 years of broadly easy monetary policy, some countries have borrowed a lot, and they're probably at the edge of their fiscal capacity. So it's important to be selective when picking your spots in emerging markets. We believe a lot of individual country opportunities can still drive returns over the course of this year.

      There are two types of countries out there: The first type are the ones that are going through the business cycle, just making cyclical changes. And then there are countries that are making structural changes.

      In my opinion, the countries that are going through cyclical changes are typically less interesting and less of an opportunity for emerging market investors.

      Bottom line: For investors that are nimble and able to pick their right spots, we think emerging markets debt can be a very attractive place.