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13-02-2015, 10:20 AM
An honorable member of the Coffee Shop Has Just Posted the Following:
Growth in emerging markets is slowing to its lowest ebb since the aftermath of the financial crisis due to a combination of China’s fading dynamism, a sputtering performance in eastern Europe and Latin America’s slowdown.
Evidence that emerging economies are entering a new era of slower growth will fuel concerns for the global outlook as western countries continue to struggle, the oil price lurches towards a four-year low and eurozone stalwart Germany suffers from declining growth.
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Data from 19 large emerging economies collated by research firm Capital Economics show that industrial output in August and consumer spending in the second quarter fell to their lowest levels since 2009. Export growth in August also plunged.
These trends are contributing to a sense that slower growth is becoming a permanent fixture among the world’s most dynamic group of economies. “This is the new normal,” said Neil Shearing, chief emerging markets economist at Capital Economics. “For the rest of the decade this is it. This is as good as it gets.”
Speaking at the annual meetings of the International Monetary Fund last week, Olivier Blanchard, the fund’s chief economist, said there had been “a fairly major change in the landscape” for emerging markets in the medium term.
Christine Lagarde, the IMF’s managing director, said there was “clearly a major slowdown in countries like Brazil and Russia”, pointing out that the end of quantitative easing would send shockwaves to emerging economies. “We’re going to continue to caution a lot of the emerging market economies . . . to just prepare themselves for a bit more volatility than we have observed over the last few months,” she said.
beyondbrics
Beyond brics
Emerging markets: News and comment from more than 40 emerging economies
George Magnus, senior adviser to UBS, said: “It is now clear that the exceptional acceleration in emerging market growth between 2006 and 2012 is over,” he said, noting that the IMF has revised downward its forecasts for EM growth on six occasions since late 2011.
Although official gross domestic product statistics for the third quarter have not yet been published, projections are bleak. China’s GDP annual growth rate in the quarter – due to be announced next week – is set to plunge to 6.8 per cent, down from 7.5 per cent in the second quarter, according to Jasper McMahon of Now-Casting Economics in London.
Brazil is on track to report GDP growth of 0.3 per cent this year, down from an official 2.5 per cent in 2013, according to Now-Casting’s model.
Capital Economics’ model, which makes projections for overall EM GDP growth based on published official and private data, shows an aggregate growth rate of 4.3 per cent in July, down from 4.5 per cent in June and preliminary numbers for August suggest a further slowdown.
Slowing growth and regional industrial production charts
“It looks like August is going to be the weakest month in terms of emerging markets’ GDP growth since October 2009,” Mr Shearing said.
The most rapid deterioration has come in eastern Europe, where a faltering German economy – which suffered a 4 per cent fall in industrial output in August – has clobbered the companies that form its industrial supply chain.
In Latin America, industrial output contracted in August, partly because of dwindling demand for commodities from a slowing China and partly because consumer demand in the region is also slowing amid high inflation.
Emerging Asia remains the most resilient of the large EM areas, posting industrial output growth of 5 per cent in August, compared with an EM average of 2 per cent, according to Capital Economics. Even here, though, energy is starting to diminish as China slows.
Michael Power, strategist at Investec Asset Management, names the tapering of quantitative easing by the US Federal Reserve and slowing commodity demand from China as the “two moons” responsible for the ebbing tides of EM growth.
However, he sees the slowdown as cyclical in nature. He said demographics, infrastructure development and the rise of the urban middle class would eventually overwhelm this weakness. “We need to be careful before we throw all the EM babies out with the now draining QE bath water.”
http://www.ft.com/cms/s/0/c64c6944-5...#axzz3RaRzggBV (http://www.ft.com/cms/s/0/c64c6944-51f8-11e4-b55e-00144feab7de.html#axzz3RaRzggBV)
Click here to view the whole thread at www.sammyboy.com (http://www.singsupplies.com/showthread.php?200487-Emerging-markets-enter-slow-growth-era&goto=newpost).
Growth in emerging markets is slowing to its lowest ebb since the aftermath of the financial crisis due to a combination of China’s fading dynamism, a sputtering performance in eastern Europe and Latin America’s slowdown.
Evidence that emerging economies are entering a new era of slower growth will fuel concerns for the global outlook as western countries continue to struggle, the oil price lurches towards a four-year low and eurozone stalwart Germany suffers from declining growth.
More
ON THIS STORY
Gavyn Davies It’s the ‘new mediocre’
Joe Zhang China’s policy ramble
Economic growth is uneven around the world
beyondbrics
Merryn Somerset Webb Unanswered questions over China
IN GLOBAL ECONOMY
Central banks act to stave off deflation
Riksbank cuts Sweden’s rates to negative
Riksbank takes rates cut leap into unknown
Plastic pours into seas at 8m tonnes a year
Sign up now
firstFT
FirstFT is our new essential daily email briefing of the best stories from across the web
Data from 19 large emerging economies collated by research firm Capital Economics show that industrial output in August and consumer spending in the second quarter fell to their lowest levels since 2009. Export growth in August also plunged.
These trends are contributing to a sense that slower growth is becoming a permanent fixture among the world’s most dynamic group of economies. “This is the new normal,” said Neil Shearing, chief emerging markets economist at Capital Economics. “For the rest of the decade this is it. This is as good as it gets.”
Speaking at the annual meetings of the International Monetary Fund last week, Olivier Blanchard, the fund’s chief economist, said there had been “a fairly major change in the landscape” for emerging markets in the medium term.
Christine Lagarde, the IMF’s managing director, said there was “clearly a major slowdown in countries like Brazil and Russia”, pointing out that the end of quantitative easing would send shockwaves to emerging economies. “We’re going to continue to caution a lot of the emerging market economies . . . to just prepare themselves for a bit more volatility than we have observed over the last few months,” she said.
beyondbrics
Beyond brics
Emerging markets: News and comment from more than 40 emerging economies
George Magnus, senior adviser to UBS, said: “It is now clear that the exceptional acceleration in emerging market growth between 2006 and 2012 is over,” he said, noting that the IMF has revised downward its forecasts for EM growth on six occasions since late 2011.
Although official gross domestic product statistics for the third quarter have not yet been published, projections are bleak. China’s GDP annual growth rate in the quarter – due to be announced next week – is set to plunge to 6.8 per cent, down from 7.5 per cent in the second quarter, according to Jasper McMahon of Now-Casting Economics in London.
Brazil is on track to report GDP growth of 0.3 per cent this year, down from an official 2.5 per cent in 2013, according to Now-Casting’s model.
Capital Economics’ model, which makes projections for overall EM GDP growth based on published official and private data, shows an aggregate growth rate of 4.3 per cent in July, down from 4.5 per cent in June and preliminary numbers for August suggest a further slowdown.
Slowing growth and regional industrial production charts
“It looks like August is going to be the weakest month in terms of emerging markets’ GDP growth since October 2009,” Mr Shearing said.
The most rapid deterioration has come in eastern Europe, where a faltering German economy – which suffered a 4 per cent fall in industrial output in August – has clobbered the companies that form its industrial supply chain.
In Latin America, industrial output contracted in August, partly because of dwindling demand for commodities from a slowing China and partly because consumer demand in the region is also slowing amid high inflation.
Emerging Asia remains the most resilient of the large EM areas, posting industrial output growth of 5 per cent in August, compared with an EM average of 2 per cent, according to Capital Economics. Even here, though, energy is starting to diminish as China slows.
Michael Power, strategist at Investec Asset Management, names the tapering of quantitative easing by the US Federal Reserve and slowing commodity demand from China as the “two moons” responsible for the ebbing tides of EM growth.
However, he sees the slowdown as cyclical in nature. He said demographics, infrastructure development and the rise of the urban middle class would eventually overwhelm this weakness. “We need to be careful before we throw all the EM babies out with the now draining QE bath water.”
http://www.ft.com/cms/s/0/c64c6944-5...#axzz3RaRzggBV (http://www.ft.com/cms/s/0/c64c6944-51f8-11e4-b55e-00144feab7de.html#axzz3RaRzggBV)
Click here to view the whole thread at www.sammyboy.com (http://www.singsupplies.com/showthread.php?200487-Emerging-markets-enter-slow-growth-era&goto=newpost).