Emerging markets are fast becoming the engine of the global economy, as higher-for-longer interest rates, aging populations and tepid productivity sap momentum in advanced nations. Capital, factories and talent are flowing toward faster-growing hubs across Asia, Latin America and parts of Africa, redrawing supply chains and investment maps in the process.
From India’s expanding services and manufacturing base to Mexico’s nearshoring boom and Vietnam’s role in electronics, a new growth geography is taking shape. The International Monetary Fund projects that emerging and developing economies will deliver the bulk of global growth over the next five years, with India alone set to contribute a sizable share. Even as China’s expansion slows from its breakneck past, demand from a rising middle class, rapid digital adoption and the race to secure critical minerals for the energy transition are reinforcing the shift.
This article examines the drivers behind the surge, the markets to watch, and the risks that could test the thesis-from dollar strength and debt burdens to political volatility and climate shocks-at a moment when the world’s economic center of gravity is unmistakably moving south and east.
Table of Contents
- Emerging demand and reconfigured supply chains shift global growth to Asia Africa and Latin America
- Policy priorities to convert momentum into resilience invest in reliable power, modern ports, and digital payments, deepen local capital markets, and keep inflation expectations anchored
- What investors and multinationals should do overweight India, Indonesia, Mexico, and Brazil, build capacity through nearshoring and friendshoring, secure critical minerals and logistics, hedge currency risk, and partner on workforce skills
- The Conclusion
Emerging demand and reconfigured supply chains shift global growth to Asia Africa and Latin America
Trade and capital are pivoting as multinationals rewire production networks to reduce single-market exposure and chase fast-growing consumers across Asia, Africa, and Latin America; manufacturing footprints are shifting from coastal China to diversified nodes-Vietnam, India, Indonesia, Mexico, Morocco, and Egypt-while policy tailwinds (RCEP, AfCFTA, USMCA) compress tariffs and transit times, and investment targets ports, rail, data centers, and industrial parks. With urban middle classes expanding and energy transition supply chains localizing, companies are building resilient, multi-node systems anchored by friend-shoring and China+1 strategies, channeling financing into corridors that move goods, electrons, and data at lower risk and cost.
- Manufacturing realignment: Electronics, autos, and renewables scale in India, Vietnam, Thailand, Mexico, and Brazil as export platforms deepen.
- Resource-to-refinery arcs: Critical minerals from Indonesia, DRC, and Chile feed regional processing and EV battery value chains.
- Trade architecture: RCEP and AfCFTA streamline regional flows; USMCA accelerates nearshored components across North America.
- Digital rails: Mobile money and real-time payments in Kenya, Nigeria, India, and Brazil widen SME market access and spur consumption.
- Infrastructure push: New corridors-India-Middle East-Europe, Lobito, and North-South routes-cut lead times and diversify sea-lane exposure.
Policy priorities to convert momentum into resilience invest in reliable power, modern ports, and digital payments, deepen local capital markets, and keep inflation expectations anchored
Policymakers across emerging economies are moving from headline growth to hard-won resilience, channeling capital toward bankable infrastructure, frictionless payments, deeper domestic finance, and credible macro anchors that crowd in private investment and stabilize expectations.
- Reliable power: Upgrade transmission and distribution to cut losses; add flexible generation, storage, and regional interconnectors; reform utilities with cost-reflective tariffs and targeted protection for vulnerable users; embed climate resilience standards; mobilize PPPs and blended finance for grid-scale projects.
- Modern ports and trade corridors: Expand container capacity and dredging, link rail and last-mile logistics, deploy single-window customs and e-manifests, promote competition in terminal operations, and roll out cold-chain and green bunkering to reduce dwell times and diversify exports.
- Digital payments at scale: Build real-time, interoperable rails with low merchant fees; enable e-KYC via digital ID; strengthen cybersecurity and data governance; integrate tax and invoicing systems; and connect cross-border remittance corridors to lower costs and broaden formalization.
- Deeper local capital markets: Establish liquid local-currency benchmarks and repo facilities, develop FX and rates hedging, expand securitization for infrastructure and MSME credit, widen the domestic investor base (pension and insurance reforms), and modernize insolvency, disclosure, and collateral registries.
- Anchored inflation expectations: Preserve central bank independence and clear forward guidance, allow FX flexibility to absorb shocks, pair credible fiscal rules with targeted social support, ease supply bottlenecks (food, transport), and rebuild buffers to reduce risk premia.
What investors and multinationals should do overweight India, Indonesia, Mexico, and Brazil, build capacity through nearshoring and friendshoring, secure critical minerals and logistics, hedge currency risk, and partner on workforce skills
Global capital is pivoting toward scalable, rules-based growth hubs, and operators moving first are codifying playbooks that prioritize:
• Portfolio tilt toward India, Indonesia, Mexico, and Brazil, targeting manufacturing, digital payments, EV supply chains, and low-carbon infrastructure-while enforcing governance screens and local co-investment to mitigate execution risk.
• Capacity build-out via nearshoring and friendshoring: allocate plants and suppliers to Mexico’s northern belt and Bajío, India’s Tamil Nadu-Gujarat corridors, Indonesia’s Java-Sulawesi industrial parks, and Brazil’s Southeast clusters to shorten lead times and diversify exposure.
• Resource and logistics security through offtake agreements in nickel (Indonesia), lithium (Brazil), copper (Mexico), and rare earth inputs (India), paired with port access, cold-chain, and multimodal redundancy.
• Currency risk hedging using local-currency financing, NDFs and options, and operational “natural hedges” that match costs and revenues.
• Workforce partnerships with polytechnics and state skilling programs for dual-training, women-in-STEM pipelines, AI-enabled productivity, and EHS compliance, locking in quality and social license at scale.
The Conclusion
As growth in advanced economies downshifts, a widening set of emerging markets is carrying more of the global expansion-propelled by reconfigured supply chains, rising digital adoption, and the early stages of the energy transition. The story is not uniform: inflation is easing but uneven, currencies remain sensitive to U.S. rate moves, and debt burdens in some frontier economies constrain policy. Climate shocks and geopolitics add layers of risk even as investment diversifies toward markets with reform momentum.
The next phase hinges on execution. China’s rebalancing, the trajectory of U.S. monetary policy, and election-heavy calendars across the developing world will shape capital flows. Reforms that deepen local capital markets, strengthen institutions, broaden tax bases, and accelerate infrastructure-both green and physical-could convert cyclical resilience into sustained convergence. For investors and policymakers alike, the question is less whether emerging markets contribute to global growth than how broadly and durably that contribution extends. The answer will help define the contours of the world economy in the years ahead.