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GDP growth across much of the globe is expected to outpace the United States in the coming years, particularly in emerging markets.

International growth expected to outpace the U.S. chart

Global economic growth has rebounded sharply this year, supported by massive fiscal and monetary stimulus, the easing of economic restrictions as vaccinations increased, the pace of new COVID-19 cases receded, and a sense of optimism emerged.

Unquestionably, the U.S. economy has been in the lead pack in the recovery, due in part to the earlier availability of vaccines and high vaccination rates compared to much of the rest of the world. In response, U.S. equities have performed very well, notably outpacing international stocks year to date. However, the pace of economic growth here has likely already peaked, while the international backdrop is expected to be sustained to a greater degree, particularly in emerging market (EM) economies.

These growth expectations have meaningful implications for the outlook across equity markets. While international stocks have recently lagged their U.S. counterparts, the growth environment appears positive for international equities in the coming years.

EM equities have taken a hit in recent months as regulatory crackdowns on large Chinese multinationals sparked investor concerns about investing in the region. Those developments are a reminder of the diverse characteristics of EM markets — a fact that underscores the importance of skilled managers who can find attractive opportunities.
Nevertheless, we believe that EM equities continue to play an important role in portfolios, given their strong growth potential in the near term as well as over the long term.

Past performance does not guarantee future results. All investments include risk and have the potential for loss as well as gain.

Data sources for peer group comparisons, returns, and standard statistical data are provided by the sources referenced and are based on data obtained from recognized statistical services or other sources believed to be reliable. However, some or all information has not been verified prior to the analysis, and we do not make any representations as to its accuracy or completeness. Any analysis non-factual in nature constitutes only current opinions, which are subject to change. Benchmarks or indices are included for information purposes only to reflect the current market environment; no index is a directly tradable investment. There may be instances when consultant opinions regarding any fundamental or quantitative analysis may not agree.

Plante Moran Financial Advisors (PMFA) publishes this update to convey general information about market conditions and not for the purpose of providing investment advice. Investment in any of the companies or sectors mentioned herein may not be appropriate for you. You should consult a representative from PMFA for investment advice regarding your own situation.