India seen as safe haven amid global trade jitters, to lead 2025 growth: JP Morgan
The financial major said India is benefiting from a combination of falling inflation, improved system liquidity, and reduced government borrowing—factors that are expected to support economic expansion, ANI reported.
'India: Falling inflation, enhanced system liquidity and lower borrowing to boost growth. Timely demand stimulus and support to urban household balance sheet,' the report noted.
JP Morgan projected that India will record the highest GDP growth among all countries in its global universe in 2025. Growth is also being aided by demand-side stimulus and improving urban household finances. Additionally, a favourable monsoon and a rebound in the rural economy are contributing to the positive outlook.
The report highlighted that India currently holds a 19 per cent weight in the MSCI Emerging Markets (EM) Index and has been assigned an 'Overweight' (OW) rating by the firm. Alongside India, JP Morgan's EM strategists remain constructive on Korea, Brazil, the Philippines, UAE, Greece, and Poland.
While EM equities have witnessed substantial outflows since August 2023, the trend has recently reversed, with fresh inflows reflecting rising investor confidence.
On the valuation front, the MSCI EM Index is trading on the cheaper side of fair value compared to developed markets. The report also noted that foreign exchange trends remain key to EM equity performance, as EM equities typically perform inversely to the US dollar. The recent weakening of the dollar—especially following tariff-related announcements—could further benefit EM assets.
A positive shift in earnings forecast revisions was also highlighted.
After prolonged downgrades over the past couple of years, the forecast revision index for EMs versus developed markets has started moving upward, pointing to a more optimistic earnings outlook.
India's year-to-date (YTD) performance stands at 5.8 per cent in local currency terms and 5.7 per cent in US dollar terms. Though not among the top EM performers by absolute return, India's stability and economic trajectory continue to make it attractive for long-term investors.
Overall, JP Morgan said improving macro fundamentals and supportive external conditions make India a market to watch among emerging economies.
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