1. Slowdown in Emerging Markets : Rough Patch or Prolonged Weakness?
- Author
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Didier, Tatiana, Kose, M. Ayhan, Ohnsorge, Franziska, and Ye, Lei Sandy
- Subjects
ECONOMIC CONSEQUENCES ,INVESTMENT ,CAPITAL FLOWS ,GROWTH RATES ,DEMOGRAPHIC ,ECONOMIC GROWTH ,SHARE OF WORLD OUTPUT ,DURABLE GOODS ,WORLD TRADE ,DISCOUNT RATES ,GOVERNMENT DEBT ,COMMODITY ,TERMS OF TRADE ,INTERNATIONAL CAPITAL MARKETS ,EMERGING MARKET ,ECONOMIC GROWTH ,MARKET ECONOMIES ,POPULATION GROWTH ,UNEMPLOYMENT ,INCOME ,EXPORT GROWTH ,GLOBAL RISKS ,INFRASTRUCTURE INVESTMENT ,VALUES ,RESOURCE ALLOCATION ,LABOR PRODUCTIVITY ,FINANCIAL CRISIS ,URBANIZATION ,WORLD DEVELOPMENT INDICATORS ,OIL ,INCENTIVES ,BALANCE SHEETS ,INVESTORS ,OPTIONS ,E60 ,FINANCIAL MARKET ,PRODUCTION PROCESSES ,PRIVATE CAPITAL FLOWS ,METALS ,OPEC ,ADVANCED ECONOMY ,EMERGING MARKETS ,EXPOSURES ,GLOBAL INVESTORS ,MODELS ,EMERGING ECONOMIES ,BALANCE OF PAYMENTS ,SUBSIDIES ,TAX REFORM ,GLOBAL OUTPUT ,BUSINESS CYCLES ,GOVERNANCE INDICATORS ,PRICES ,WAGES ,GLOBAL ECONOMY ,PURCHASING POWER ,PROPERTY RIGHTS ,ENERGY TAXES ,DEREGULATION ,BANKING ,NATIONAL INCOME ,ENVIRONMENT ,MONETARY POLICY ,CONSUMPTION ,FISCAL DEFICITS ,INTEREST RATES ,PRIVATE CAPITAL ,ENVIRONMENTAL ,DEBT ,DISINFLATION ,TRADE ,POWER OUTAGES ,EQUILIBRIUM ,TECHNOLOGICAL CHANGES ,ECONOMIC CONDITIONS ,INTERNATIONAL BEST PRACTICE ,SUSTAINABLE DEVELOPMENT ,PROPERTY ,DEBTS ,MARKET VOLATILITY ,IRREVERSIBILITY ,ENVIRONMENTS ,ECONOMIC DEVELOPMENT ,O43 ,MONETARY POLICIES ,DIVIDENDS ,RESOURCES ,DEVELOPED COUNTRIES ,DEMAND ,PRIVATE CONSUMPTION ,PRODUCTIVITY GROWTH ,EXPANSIONARY FISCAL POLICY ,INVESTMENT CLIMATE ,DEVELOPING ECONOMIES ,ECONOMIC ACTIVITY ,ADVANCED ECONOMIES ,SCIENTIFIC KNOWLEDGE ,structural reforms ,CURRENCIES ,COAL ,POLITICAL ECONOMY ,BUSINESS ENVIRONMENT ,MULTIPLIERS ,EXCHANGE ,ENERGY CONSUMPTION ,ECONOMIES ,AGGREGATE DEMAND ,CAPITAL MARKETS ,GOVERNANCE ,GLOBAL FINANCIAL MARKET ,INTERNATIONAL TRADE ,STOCK INDEXES ,GLOBAL ECONOMIC PROSPECTS ,FISCAL POLICY ,FINANCIAL SYSTEM ,OUTPUT ,OIL PRICES ,TERMS‐OF‐TRADE ,F43 ,CURRENCY ,TECHNOLOGICAL PROGRESS ,TAXES ,EQUITY ,BOND ,GOVERNMENT SECURITIES ,LAND ,EFFICIENCY ,CAPITAL GOODS ,ECONOMIC EFFECTS ,STRUCTURAL UNEMPLOYMENT ,O4 ,ECONOMISTS ,CREDIT ,EXPENDITURES ,COMMODITY PRICES ,MACROECONOMIC POLICY ,SECURITIES ,FUTURE ,ddc:330 ,LABOR INPUTS ,FISCAL POLICIES ,INFLATION‐TARGETING ,CENTRAL BANKS ,LABOR MARKETS ,EMERGING MARKET ECONOMIES ,WORLD ECONOMY ,EXPECTATIONS ,DATA AVAILABILITY ,growth slowdown ,ECONOMICS ,INTEREST ,policy space ,NATURAL RESOURCES ,LABOR FORCE ,REVENUES ,ADVERSE EFFECTS ,SHARE ,INTEREST RATE ,F6 ,CAPITAL CONSTRAINTS ,VOLATILITY ,INTERNATIONAL CAPITAL - Abstract
A synchronous growth slowdown has been underway in emerging markets (EM) since 2010. Growth in these countries is now markedly slower than, not just the pre‐crisis average, but also the long‐term average. As a group, EM growth eased from 7.6 percent in 2010 to 4.5 percent in 2014, and is projected to slow further to below 4 percent in 2015. This moderation has affected all regions (except South Asia) and is the most severe in Latin America and the Caribbean. The deceleration is highly synchronous across countries, especially among large EM. By 2015, China, Russia, and South Africa had all experienced three consecutive years of slower growth. The EM‐AE growth differential has narrowed to two percentage points in 2015, well below the 2003‐08 average of 4.8 percentage points and near the long‐term average differential of 1990‐2008. The recent slowdown in EM has been a source of a lively debate, as evident from the quotations at the beginning of this note. Some economists paint a bleak picture for the future of EM and argue that the impressive growth performance of EM prior to the crisis was driven by temporary commodity booms and rapid debt accumulation, and will not be sustained. Others emphasize that a wide range of cyclical and structural factors are driving the slowdown: weakening macroeconomic fundamentals after the crisis; prospective tightening in financial conditions; resurfacing of deep‐rooted governance problems in EM; and difficulty adjusting to disruptive technological changes. Still others highlight differences across EM and claim that some of them are in a better position to weather the slowdown and will likely register strong growth in the future. This policy research note seeks to help move the debate forward by examining the main features, drivers, and implications of the recent EM slowdown and provides a comprehensive analysis of available policy options to counteract it.
- Published
- 2015