Emerging markets growth picks up in fourth quarter
Economic growth in emerging markets has “accelerated a little” in the fourth quarter, an economic research consultancy’s data show
London-based Capital Economics uses an instrument called EM GDP Tracker to gauge gross domestic product trends in emerging markets, using monthly retail sales and industrial production data.
The latest data used were for October and the good news is that there are early signs that EM growth may have picked up at the start of Q4, Neil Shearing, Capital Economics chief emerging markets economist, said.
Official data suggest that growth in emerging markets slowed to 4.2% year-on-year in the third quarter, the weakest in three years and below the 6.4% growth seen over the past decade.
But our GDP tracker suggests that growth may now have ticked up to around 4.5% year-on-year or so, he said.
Shearing noted that the Tracker had occasionally pointed to improvement in performance that failed to materialize, but said that generally its accuracy in predicting GDP was pretty good.
But even though growth seems to pick up, it will be difficult to sustain it further if the global economy remains weak, and with structural problems deepening in some big emerging markets, he added.
Shearing pointed out that not all the emerging markets have seen the same improvement in performance, with the pick-up in growth appearing to be concentrated in Asia and Latin America.
Exports to the crisis-stricken eurozone will remain a source of weakness in emerging markets, according to further research from Capital Economics.
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Export volumes from emerging markets to the eurozone contracted by 5% year-on-year in the third quarter of this year, subtracting 0.2 percentage points from the pace of emerging markets expansion, according to the research.
Emerging Europe suffered the worst, with Czech, Hungarian and Romanian exports taking a big hit. Nigerian GDP was also affected, with nearly 3 percentage points shaved off growth; also hard hit were Taiwan which exports electronics and tech items to the eurozone and Saudi Arabia.
All of the BRIC nations have lost out to the tune of between 0.2 percentage points and 0.7 percentage points, the Capital Economics research shows.The consultancy firm expects the spillover from the eurozone crisis to worsen next year.