Financial services company S&P Global Ratings on June 28 revised upward its forecast for growth this year in key emerging economies in Europe, the Middle East and Africa (EMEA).

It now expects gross domestic product (GDP) growth of 4.5% in Poland, 3.7% in Russia and 4.2% in South Africa.

“The economic recovery in emerging markets in EMEA is progressing at a faster pace than we expected,” says S&P Global Ratings emerging markets lead economist Tatiana Lysenko.

"This surprise upside stems chiefly from stronger-than-expected domestic demand, with consumption proving more resilient to lockdown restrictions this year than in 2020, although consumption and mobility are still highly correlated,” she adds.

The report notes that GDP rose at a quarterly pace of 1.1% in Poland and South Africa, despite unfavourable pandemic developments and lockdowns during part of the quarter.

Export volumes, on the other hand, eased after recovering strongly in previous months. Coupled with rising import values, this resulted in negative contributions from net exports for both Poland and South Africa, the firm says.

The South Africa forecast is revised upwards from the previously expected 3.6%.

S&P notes that rising export prices have had a direct positive impact on the mining sector, but also an indirect effect on consumption owing to the ensuing strengthening of the exchange rate, which is boosting consumer purchasing power.

However, it says that an investment recovery is lagging in the country, electricity supply bottlenecks persist and unemployment remains high.

The company expects growth to weaken once the boost from improved terms of trade wane. The vaccine rollout is slow and a third wave of the pandemic threatens to dent the momentum in consumption in the country, the firm states.

Top risks to the company’s forecasts for the EMEA region are further waves of infections and slower progress in vaccinations, delaying the exit from the pandemic, as well as an abrupt tightening in financial conditions linked to uneven global recovery, with US growth powering ahead and the US Federal Reserve potentially raising rates earlier than planned, the report says.