Reports that investment growth in emerging markets and developing economies (EMDEs) has slowed sharply since 2010, a deceleration most pronounced in the largest emerging markets and commodity-exporting EMDEs, but now spreading to the majority of these economies, with investment growth below its long-term average in most EMDEs over the past quarter century except during serious global downturns. These economies account for more than one-third of global GDP and about three-quarters of the world’s population and the world’s poor, and this slowing investment growth reflects a range of obstacles holding back investment, including (1) terms-of-trade shocks (for oil exporters), (2) slowing foreign direct investment inflows (for commodity importers), and (3) private debt burdens and political risk (for all EMDEs). Weak investment remains a significant challenge for EMDEs in light of their sizable investment needs to stimulate expanding economic activity, to accommodate rapid urbanization, and to achieve sustainable development goals.
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