Analysis by Fitch Solutions’ BMI Research identifies a group of large frontier and emerging markets that are growing strongly this year, despite the expected broad global economic slowdown. 

Average worldwide growth is expected to fall to one of the lowest levels in the last two decades, yet several emerging and frontier markets – all with populations of around 100-150mn – are set to defy the trend with robust growth, Cedric Chehab, chief economist at BMI, told a July 9 webinar. 

While the impact of US President Donald Trump’s new tariffs remains uncertain, Chehab highlighted the diverging trajectories between developing and developed economies this year. 

“We expect the global economy to slow from 2.6% in 2024 to 2.2% this year  –  the slowest pace in nearly two decades outside of the Covid recession and the Global Financial Crisis,” Chehab said. This is a downgrade of between 0.2 and 0.4 percentage points (pp) compared to BMI’s January forecasts. 

However, Chehab added, “developing markets will continue to advance while developed markets lag”.

Sub-Saharan Africa is one region where there has been no downgrade due, the economist said, to several domestic factors including an increase in Nigeria’s energy production. 

The Middle East and North Africa (MENA) region, meanwhile, is benefitting from a significant increase in oil production as OPEC+ returns barrels to the market after voluntary production cuts last year. 

Moreover, a group of large emerging and frontier markets is expected to sustain exceptionally high growth rates over the coming five years.

Chehab noted that these countries are projected to deliver average GDP growth rates exceeding 6% annually, with the exception of Indonesia where growth is forecast to grow by above 5%. 

This far outpaces more mature developing economies like Mexico, Brazil and Russia, where growth will remain much slower.

The countries fall into three broad groups. Southeast Asian economies the Philippines, Vietnam and Indonesia benefit from relatively higher income levels and are expected to sustain strong growth, with potential to outperform their peers.

Nigeria, Egypt and Pakistan, despite large populations, face significant structural challenges that could temper their growth prospects. 

Frontier markets such as Bangladesh, the Democratic Republic of Congo (DRC) and especially Ethiopia have lower income levels but are poised for rapid growth, according to BMI.

Despite these bright spots, Chehab warned of ongoing risks from escalating trade tensions. “Tariffs remain a significant source of uncertainty.” While the recent letters sent by Trump to certain countries are "likely a negotiating tactic to allow more deals to be signed,” he told the webinar, “Even if we do get more trade deals, many will likely be framework deals rather than deals ratified by Congress, and this leads to uncertainty.”

Chehab pointed to potential tariff increases in pharmaceuticals, which could see rates rise to 200%, and indicated that smaller countries could be disproportionately affected due to limited negotiating power.

The economist added that while current forecasts do not incorporate sharp tariff escalations, a sudden spike could subtract 0.2-0.5pp from global growth and elevate recession risks, particularly in the US.

In contrast to the fast-growing emerging and frontier markets, BMI expects sluggish growth in the world’s main developed economies. 

The US economy is forecast to slow from 2.8% growth to below its long-term trend of 1.5%, with uncertainty and inflation pressures driving a “stagflation-lite” scenario. “We expect sluggish recovery with growth around 1.7% in 2026 and a moderate rise in unemployment,” Chehab said.

China’s growth is forecast at 4.5%, below government targets, supported by stimulus measures in the first half of the year and tariff front-loading. However, consumption and the housing market are expected to weaken in the second half.

The Eurozone outlook remains weak, with growth around 0.8%, largely weighed down by tariff uncertainties and sluggish performance in major economies like Germany, France and Italy.