The International Monetary Fund forecasts that emerging markets gross domestic product (GDP) will grow 4.2% in 2016 vs. 1.6% for developed markets — a 2.6% growth differential. This is the first expected growth differential since 2011, with projections to increase every year through 2020. Historically, when emerging market GDP growth accelerates quicker than developed market GDP growth (the EM to DM growth differential increases), emerging market equities have usually outperformed.
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