New Delhi [India], November 16 (ANI): Emerging markets, including India, are expected to deliver the strongest equity market performance over the next decade, according to Goldman Sachs’ latest Global Strategy Paper No. 75 — Building Long-Term Returns: Our 10-Year Forecasts. The report highlights India as a key standout, driven by robust earnings growth and supportive policy reforms.
Goldman Sachs projects annualised returns of 10.9 per cent in emerging markets over the coming decade, outpacing the US (6.5 per cent), Europe (7.1 per cent), Japan (8.2 per cent), and Asia excluding Japan (10.3 per cent), all measured in USD terms. The firm attributes this outperformance to strong earnings-per-share (EPS) expansion in major emerging economies such as India and China.
The report notes that both countries are benefiting from policy reforms that are bolstering shareholder returns. Despite elevated global valuations, Goldman Sachs expects equities worldwide to generate solid long-term gains. “Our forecast of 7.7 per cent per annum (in USD) sits close to the historical median, supported by structural drivers such as nominal growth, profitability, and shareholder distributions,” the report stated.
Earnings growth will remain the central force behind global equity returns. Goldman Sachs anticipates global earnings — including buybacks — to grow at approximately 6 per cent annually, with dividends contributing the remaining portion of returns. Valuations, it noted, are likely to moderate slightly from their current highs.
For India, the outlook is even stronger. The report predicts the country will achieve the highest earnings growth globally at 13 per cent CAGR, underpinned by solid economic fundamentals and favourable demographic trends.
While valuations remain a challenge in certain markets, the firm emphasised that they do not overshadow the long-term equity outlook. It reiterated that elevated US market valuations strengthen the case for diversification into emerging markets, where improving market structures and higher nominal growth provide a competitive edge over developed economies.
For the S&P 500, the report forecasts an average annual return of 6.5 per cent over the next decade, with potential outcomes ranging from 3 per cent to 10 per cent depending on economic conditions. “We expect earnings will remain the primary driver of equity returns during the next 10 years,” Goldman Sachs added. (ANI)
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