2013 wasn't a great year for emerging markets.
Unfortunately, problems could persist a little longer.
Emerging markets have a busy political calendar in 2014. And there are concerns that officials won't push through much needed reforms, sticking to populist policies ahead of the elections instead. This political disincentive, could only exacerbate economic woes in these countries.
Let's take a quick look at the upcoming 2014 elections and what these mean for the country.
- Turkey (municipal elections, March; presidential election, August): The local elections will be a test for Recep Erdogan's AKP government following on the Gezi Park protests. The international community condemned the government crackdown on the protests and this could impact its membership in the EU. "Turkey needs to formulate a new narrative underpinned by a tighter policy framework with a supply-side focus," write Citi analysts. "We think this is not very likely to materialize owing to an election heavy calendar."
- Indonesia (legislature elections, April 9; presidential election, July 9): Indonesia's currency is in crisis, its stocks have experienced extreme volatility, and and its streets are filled with protesters amid fuel price hikes. Indonesia needs subsidy reform but major moves are unlikely ahead of the elections.
- South Africa (legislature elections by July): South Africa still struggles to undo the excesses of the South African Land Act, which, when it was passed a 100 years ago, prevented South Africa's black majority from owning land. The country also needs labor reforms to address labor unrest.
- India (general election, May): Populist reforms like the food security bill have been pushed through. But there are concerns that reforms on the insurance Bill that will increase foreign direct investment (FDI) in insurance to 49% from 26% could get stalled. There is also the concern that whichever party is voted into power will have to form a coalition with smaller parties and some states will continue to be controlled by opposition parties and that too could stall reform.
- Brazil (presidential, general, and local elections in Q4 2014): Brazil's tax code is in need of major reform. One example is the ICMS tax, a state tax. This issue was brought to the forefront with the release of Sony's Playstation 4, which went on sale for $399 in the U.S., and $1,850 in Brazil, according to Monitor Frontier Markets. The federal government wants to have single federal tax but the reform has yet to come.
Not everyone is as pessimistic about the impact of the elections on emerging market nations though.
"Although election uncertainty suggests higher risk premia, elections could also be a catalyst for market-positive change," writes Alia Moubayed at Barclays.
Here's a table of all the key emerging market elections in 2014 and 2015 from Barclays:
SEE ALSO: Why 3 Of The 4 BRICs Are Failing To Meet The World's Expectations