According to the IMF’s October 2025 update, emerging and developing economies are forecasted to grow by 4.2% in 2025, significantly higher than the 1.6% expected growth for advanced economies. These economies now account for 50.6% of global GDP and 66.5% of global GDP growth in the past decade.

J.P. Morgan’s analysis shows that emerging-market equities have outperformed developed-market equities in 2025, driven by favorable economic conditions and a valuation discount. Emerging-market stocks are trading at a 35% discount to developed-market equities on forward price-to-earnings metrics, with improving earnings momentum supporting potential valuation re-rating.

Easing monetary policies in developing nations are creating easier financing conditions, leading to rising loan demand and stronger return on equity for banks in emerging markets. Inflation moderation and currency stabilization are supporting credit expansion, with double-digit bank credit growth seen in countries like India, the Philippines, and Vietnam.

Emerging markets are experiencing a rise in manufacturing activity due to global supply-chain diversification. Countries like India, Vietnam, and Indonesia are attracting manufacturing FDI, with India’s electronics output, particularly mobile phone exports, showing significant growth. This shift is driving industrial growth and investment in these regions.

ICICI Bank, Taiwan Semiconductor, and MercadoLibre are identified as well-positioned EM stocks poised for growth in 2026. ICICI Bank is improving digital banking services, Taiwan Semiconductor dominates the semiconductor foundry space, and MercadoLibre leads in e-commerce and digital banking sectors. These stocks are expected to report strong earnings growth in 2026.

Zacks Investment Research is naming the top 10 stocks for 2026, with a history of significant performance. These picks will be released on January 5, offering investors the opportunity to capitalize on potential market gains. Don’t miss out on these early tips for potentially high-performing stocks in the year ahead.

Read more at Nasdaq: Emerging Markets to Outperform: 3 Stocks for 2026 Growth & Value