Annual GDP Growth: A Good Predictor of Single-Country ETF Returns?

by on September 3, 2014

The ETF universe has grown by leaps and bounds over the last few years, and the product lineup has expanded beyond many investors’ wildest expectations. Through the use of a single ticker, anyone with an online brokerage account can now access virtually any asset class from around the globe, whether it’s emerging market small caps, commodities, or high-yield bonds. 

FlagWhen it comes to foreign equity exposure in particular, ETFs have undeniably opened up the doors to markets that were previously hard-to-reach for retail investors. For those researching opportunities abroad, staying on top of economic growth forecasts is likely at the top of their reading list. However, there has long been a great debate about whether or not GDP growth influences equity market returns in both developed and emerging economies [see Single Country ETFs: How They've Performed Since Inception]. 

In some instances, strong GDP growth has fueled bull markets, while in other cases, these two seemingly-correlated investment factors have not behaved as many would expect; that is to say, sometimes, weak GDP growth has coincided with stellar equity market returns. We’ll let the data speak for itself as we investigate this age-old conundrum below.

Click on any of the buttons below and you’ll see a table of countries along with a single ETF representative of each nation; also listed are the annual GDP growth rates for each nation along with the ETF’s performance for that particular year. Lastly, click on any of the column headings to re-sort the table whichever way you like. 

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Country Ticker Annual GDP Growth Annual Return
United Kingdom EWU -0.77% -47.68%
Germany EWG 1.08% -45.55%
France EWQ -0.08% -43.75%
Sweden EWD -0.61% -46.91%
Austria EWO 1.44% -63.49%
Netherlands EWN 1.80% -49.00%
Belgium EWK 0.99% -63.57%
Spain EWP 0.89% -38.05%
Italy EWI -1.16% -48.88%
Switzerland EWL 2.16% -28.38%
Russia RSX 5.25% -73.67%
South Africa EZA 3.62% -37.62%
China FXI 9.63% -47.78%
Malaysia EWM 4.83% -41.30%
Singapore EWS 1.79% -46.70%
South Korea EWY 2.83% -56.49%
Japan EWJ -1.04% -26.98%
Australia EWA 3.70% -48.02%
United States SPY -0.29% -36.80%
Canada EWC 1.18% -44.62%
Mexico EWW 1.40% -41.63%
Brazil EWZ 5.17% -54.36%
Chile ECH 3.29% -38.36%
Country Ticker Annual GDP Growth Annual Return
United Kingdom EWU -5.17% 36.23%
Germany EWG -5.15% 20.54%
France EWQ -3.15% 27.28%
Sweden EWD -5.03% 55.46%
Austria EWO -3.82% 57.84%
Netherlands EWN -3.67% 40.84%
Belgium EWK -2.80% 49.47%
Spain EWP -3.83% 33.09%
Italy EWI -5.49% 22.05%
Switzerland EWL -1.94% 22.10%
Russia RSX -7.82% 139.34%
Turkey TUR -4.83% 103.10%
South Africa EZA -1.53% 51.65%
China FXI 9.21% 47.34%
India EPI 8.48% 95.10%
Malaysia EWM -1.51% 49.54%
Singapore EWS -0.60% 67.93%
Thailand THD -2.33% 81.47%
South Korea EWY 0.71% 71.81%
Japan EWJ -5.53% 3.24%
Australia EWA 1.74% 68.20%
United States SPY -2.80% 26.35%
Canada EWC -2.71% 53.16%
Mexico EWW -4.70% 53.88%
Brazil EWZ -0.33% 122.00%
Chile ECH -1.04% 86.09%
Country Ticker Annual GDP Growth Annual Return
United Kingdom EWU 1.66% 8.34%
Germany EWG 4.01% 6.65%
France EWQ 1.72% -4.70%
Sweden EWD 6.56% 32.89%
Austria EWO 1.77% 14.62%
Netherlands EWN 1.53% 3.36%
Belgium EWK 2.34% 3.70%
Spain EWP -0.20% -21.18%
Italy EWI 1.72% -15.54%
Switzerland EWL 2.95% 12.66%
Russia RSX 4.50% 22.14%
Turkey TUR 9.16% 23.46%
South Africa EZA 3.14% 36.98%
China FXI 10.45% 3.54%
India EPI 10.26% 20.25%
Malaysia EWM 7.43% 37.67%
Singapore EWS 15.24% 23.33%
Indonesia IDX 6.22% 41.76%
Thailand THD 7.81% 56.74%
Vietnam VNM 6.42% 4.02%
South Korea EWY 6.50% 28.80%
Japan EWJ 4.65% 12.76%
Australia EWA 1.96% 15.35%
United States SPY 2.51% 15.06%
Canada EWC 3.37% 19.00%
Mexico EWW 5.11% 27.27%
Brazil EWZ 7.53% 7.07%
Chile ECH 5.76% 45.27%
Colombia GXG 3.97% 51.73%
Peru EPU 8.45% 57.22%
Country Ticker Annual GDP Growth Annual Return
United Kingdom EWU 1.12% -3.94%
Germany EWG 3.33% -17.64%
France EWQ 2.03% -17.69%
Sweden EWD 2.93% -16.81%
Norway NORW 1.34% -18.46%
Austria EWO 2.83% -34.23%
Netherlands EWN 0.94% -15.98%
Belgium EWK 1.75% -15.37%
Spain EWP 0.05% -9.82%
Italy EWI 0.45% -24.12%
Poland EPOL 4.45% -32.02%
Ireland EIRL 2.17% -4.83%
Switzerland EWL 1.79% -7.91%
Russia RSX 4.26% -28.18%
Turkey TUR 8.77% -36.56%
Egypt EGPT 1.76% -51.71%
South Africa EZA 3.60% -15.68%
China FXI 9.30% -17.56%
India EPI 6.64% -40.42%
Malaysia EWM 5.13% -2.62%
Singapore EWS 6.06% -18.60%
Indonesia IDX 6.49% -0.60%
Thailand THD 0.08% -4.23%
Vietnam VNM 6.24% -43.83%
South Korea EWY 3.68% -13.50%
Japan EWJ -0.45% -14.77%
Australia EWA 2.24% -11.57%
New Zealand ENZL 2.40% 0.12%
United States SPY 1.85% 1.89%
Canada EWC 2.53% -12.42%
Mexico EWW 4.04% -11.96%
Brazil EWZ 2.73% -24.14%
Chile ECH 5.84% -26.51%
Colombia GXG 6.59% -15.20%
Peru EPU 6.45% -21.78%
Country Ticker Annual GDP Growth Annual Return
United Kingdom EWU 0.28% 15.25%
Germany EWG 0.69% 32.26%
France EWQ 0.01% 24.35%
Sweden EWD 0.93% 24.47%
Norway NORW 2.90% 25.10%
Austria EWO 0.87% 30.97%
Netherlands EWN -1.25% 22.04%
Belgium EWK -0.14% 35.21%
Spain EWP -1.64% 5.39%
Italy EWI -2.37% 15.41%
Greece GREK -6.97% 29.09%
Poland EPOL 1.91% 41.60%
Ireland EIRL 0.16% 34.23%
Switzerland EWL 1.05% 21.76%
Russia RSX 3.44% 15.04%
Turkey TUR 2.13% 65.60%
Egypt EGPT 2.21% 44.56%
South Africa EZA 2.47% 21.00%
China FXI 7.65% 19.18%
India EPI 4.74% 25.34%
Malaysia EWM 5.64% 14.78%
Singapore EWS 2.50% 31.76%
Indonesia IDX 6.26% 2.40%
Thailand THD 7.67% 40.13%
Vietnam VNM 5.25% 26.40%
South Korea EWY 2.29% 21.94%
Japan EWJ 1.45% 9.22%
Australia EWA 3.61% 23.99%
New Zealand ENZL 2.31% 31.70%
United States SPY 2.78% 15.99%
Canada EWC 1.71% 9.09%
Mexico EWW 3.98% 32.82%
Brazil EWZ 1.03% 0.37%
Chile ECH 5.38% 11.31%
Colombia GXG 4.05% 27.38%
Argentina ARGT 0.95% -17.79%
Peru EPU 5.95% 23.51%
Country Ticker Annual GDP Growth Annual Return
United Kingdom EWU 1.66% 20%
Germany EWG 0.43% 31%
France EWQ 0.21% 24%
Sweden EWD 1.53% 24%
Denmark EDEN 0.40% 41%
Norway NORW 0.65% 12%
Austria EWO 0.39% 11%
Netherlands EWN -0.82% 29%
Belgium EWK 0.20% 25%
Spain EWP -1.22% 32%
Italy EWI -1.85% 19%
Greece GREK -3.86% 25%
Poland EPOL 1.57% 4%
Ireland EIRL -0.34% 46%
Switzerland EWL 1.96% 26%
Russia RSX 1.32% -1%
Turkey TUR 4.05% -27%
Egypt EGPT 2.10% 7%
South Africa EZA 1.89% -7%
China FXI 7.67% -2%
India EPI 5.02% -9%
Malaysia EWM 4.69% 8%
Singapore EWS 3.85% 0%
Indonesia IDX 5.78% -23%
Thailand THD 1.77% -15%
Vietnam VNM 5.42% 8%
South Korea EWY 2.97% 4%
Japan EWJ 1.54% 26%
Australia EWA 2.66% 2%
New Zealand ENZL 2.51% 13%
United States SPY 1.88% 32%
Canada EWC 2.01% 5%
Mexico EWW 1.07% -2%
Brazil EWZ 2.49% -17%
Chile ECH 4.07% -24%
Colombia GXG 4.26% -15%
Argentina ARGT 2.95% 15%
Peru EPU 5.82% -25%

The Bottom Line

There is not a clear cut relationship between a nation’s GDP growth and its equity market returns in a given year. In some instances, there is in fact a positive correlation, meaning that stronger GDP growth leads to higher returns for the nation’s equity market; however, in a handful of other cases, there is no direct link or even a negative correlation, meaning that the nations with the weakest economic growth can at times deliver the strongest equity market returns. 

Follow me on Twitter @SBojinov

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Disclosure: No positions at time of writing.