After a couple of years of uncertainty, developing economies are showing signs of renewed strength¹ — driven by faster growth forecasts, attractive valuations, and a surge in infrastructure and tech investment.

According to the Financial Times², fund managers are now placing more emphasis on the developing world than they have in years.

This reflects renewed confidence in regions showing stronger growth potential and could be back on the agenda for investors looking to diversify.

What’s driving the momentum?

Here’s why emerging markets are back in the spotlight for 2025…

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• Faster growth than developed markets

The IMF³ forecast that many emerging economies – including India, Indonesia, and parts of Latin America – could grow at more than double the pace of the UK, US, and eurozone this year.

• Rising middle classes

Consumer spending power is expanding fast, with millions entering the middle class and fuelling demand for goods, services, and housing.

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• Tech and infrastructure investment

From renewable energy projects to AI adoption, many emerging economies are leapfrogging older technologies and building modern infrastructure from the ground up.

• Attractive valuations

After underperforming in recent years, many emerging market funds are trading at lower valuations compared with developed market peers. This makes them potentially more appealing for long-term investors.

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Always remember, when considering any sector,  a diversified well‑balanced portfolio can smooth out risk over time.

Why it matters for you

Emerging markets can add growth potential and diversification to your portfolio. While they can be more volatile, the potential for higher growth rates can help balance a portfolio that’s heavily weighted towards the UK or US.

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Investing across different regions can also help reduce the impact of downturns in any one market. That’s why many long-term investors may include emerging markets alongside developed market holdings in their Stocks & Shares ISAs or General Investment Accounts.

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How Chip can help you take advantage

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With Chip, you can invest in funds that take a global approach to emerging markets, or focus on specific regions, like Asia-Pacific or India. This gives you access to the companies driving growth in these economies all in a single investment.

Open a Stocks & Shares ISA in minutes, invest from £1, and manage everything right from our app. Just go to the ‘Invest’ tab to get started.

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Source: 1 Trustnet 2 Financial Times 3 The IMF 

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