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    Emerging Markets Muted In Year Of The Dragon

    By (c) Sky News 2012 | Sky News – Tue, Jan 17, 2012 16:55 GMT

    Policymakers are confronting new fears over the lack of emerging market growth as they contemplate an uncertain start to 2012.

    In the fourth quarter of 2011, according to the latest quarterly HSBC Emerging Markets Index, growth remained sluggish.

    This trend is expected to continue through 2012 as the full impact of the eurozone crisis and developed market slowdown is felt across the globe.

    Sparked by a reduction in factory output across emerging Asia, manufacturing output declined for a second quarter and at the sharpest pace since the first quarter of 2009.

    Despite promising signs in India, where manufacturers registered a solid expansion in production levels, the index slipped to the third lowest point in its history.

    Service sector growth attempted to correct the downward pull of the manufacturing index with Brazil reporting an above trend expansion of service output in Q4.

    However, with lower reported volumes of new export business and falling levels of world trade, this increase only marginally beat the decrease in manufacturing activity, feeding concerns over the timing and likelihood of an economic revival.

    Despite a rush to blame the developed world for the reduction in emerging markets activity, the slowdown has also been self-inflicted.

    As their developed market peers continued to de-leverage, the emerging markets found themselves forced to adopt monetary policy that could inhibit growth.

    While they have had considerable success in taming inflationary pressures, quantitative tightening has been an unwanted drag on economic expansion.

    Policymakers must now pay careful attention to maintaining the fine balance between sustaining reduced levels of inflation and avoiding further deterioration in economic circumstances.

     

    2 comments

    • ALPHA IT
      ALPHA IT  •  Maidenhead, England  •  3 months ago
      This is hogwash dressed up as economics (which is itself mostly hogwash). If the locus of global manufacturing has shifted to the East and the locus of most of the world's consumption is in the midst of a recession, then even an imbecile would be able to predict a slowdown in the growth in global manufacturing and a slow down in growth in the world’s emerging manufacturing centres.

      The fundamentals, however, are inescapable. China, the Indian Sub Continent, the stable areas of Central Asia, Central and South America and Africa have some something that we in the prosperous nations of the North America, Europe Australasia and the developed Near East will never have again - a nearby hinterland peopled by vast multitudes, numbering in their billions, of indigenous, easily-assimilated, ambitious, driven, industrious, flexible, adaptable, cooperative, loyal, highly motivated, highly productive, non-affiliated, low cost labour, willing to do a week's or even a month's work for a tiny fraction of what it would cost to employ comparatively indifferent, apathetic, lazy, entrenched, inflexible, disaffected, uncooperative, high maintenance, self-serving, unionised, workers in the USA, Canada, Western Europe, Austrasia, South Korea or Japan for a single day.

      The economic logic is both remorseless and relentless. When the global economy recovers, China's, India’s, Brazil’s, Mexico’s, Malaysia’s, Indonesia’ and South Africa’s respective sharp, upward growth trajectories will be restored with a renewed vengeance.

      Our destiny in the world’s Post-Industrial Economies, if we are wise enough to accept, grasp and embrace it, lies in establishing world class 21s Century Service Economies based on Applied Science, Engineering, Research and Development, Design, Marketing, Education, Training, Renewable Technology and Socially Useful Finance, such as insurance and viable commercial lending, etc.

      Crowing over the tiniest of tiny, most temporary of temporary setbacks for what is inevitably the future largest economy in the history of humankind, is not only pointless. It is also, frankly, puerile.
      • Global
        Global 3 months ago
        Wow... what an intelligent and most impressive opinion... you are 110% correct on everything..good one!!
    • Danb
      Danb  •  3 months ago
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