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  • Bloomberg has ranked its top emerging market picks for next year, based on a range of indicators including growth, interest rates and debt.
  • Out of 17 countries, South Africa is in joint seventh position,
  • SA’s government debt burden is among the largest, and its expected growth rate next year not the most exciting.
  • But its interest rates and expected infrastructure investments next year are attractive.
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A Bloomberg study of the 2021 outlook of 17 emerging markets has ranked South Africa in joint seventh position, with Chile and Turkey.

Its Brics counterparts – Brazil (16), China (17) and India (11) – are much further down the list.

“China scores fairly poorly given that high expectations are already baked in, while Brazil is a laggard due to a mounting fiscal deficit and debt concerns,” the Bloomberg report notes.

The study looks at eleven indicators, ranging from expected economic growth for 2021 and the currency outlook, to interest rates and government debt, to determine Bloomberg’s top emerging market picks for next year. It also includes Goldman Sachs “lockdown index”, which looks at how much official Covid restrictions are still in place, and how much the population has started to move around.

Compared to other countries, the lockdown index shows that South Africa is already much closer to normalised levels - and once the pandemic is under control, won’t have as much to catch up on as economies like Malaysia, Chile, and the Philippines.

South Africa’s government debt burden – 62% of GDP - is among the largest, with only Brazil (89%), India (72%) and Hungary (66%) in worse positions.

Its outlook for economic growth (3.5%) next year is also among the weakest, with India potentially offering 9%, for example.

But in its favour is an attractive real interest rate (3%), which is the highest on offer across all seventeen markets, as well as high levels of expected investment in the economy – presumably due in part to government’s new infrastructure plan, which includes planned spending of R210 billion on 28 projects.

Thailand is Bloomberg’s top emerging market pick for next year, followed by Russia and South Korea.

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