Tags: HSBC | Emerging | Market | Growth | Slows | Weaker | Global

HSBC: Emerging Market Growth Slows on Weaker Global Trade

Thursday, 07 Oct 2010 03:21 PM

Emerging markets probably grew in the third quarter at the slowest pace in more than a year as global trade lost steam, HSBC PLC said.

The HSBC Emerging Markets Index, compiled by London-based Markit Economics based on monthly purchasing managers’ indexes for manufacturing and services, dropped to 54.3 from 56 in the previous three months. The last time the index was lower was in the second quarter of 2009.

“The powerful export momentum seen earlier in the year is fading fast,” Stephen King, HSBC’s London-based chief economist, said in an e-mailed report. “Business expectations in services have fallen away quickly so that they are now at their lowest since the depths of the global financial crisis. The pace of economic recovery has faded more quickly in the emerging world than in either the U.S. or the euro zone.”

While Brazil, Russia, India and China, collectively known as the BRICs, have been driving the world out of the worst recession since the Great Depression, the growth momentum has faded after manufacturers replaced inventories and demand fell short of their expectations, HSBC said. The threat of a new recession in the U.S., the world’s largest economy, and slowing growth in Europe, where governments are cutting spending to fend off a debt crisis, are weighing on the recovery worldwide.

The world economy will expand 4.2 percent next year, the Washington-based International Monetary Fund said in a report yesterday, down from its forecast of 4.3 percent three months ago. The fund projects growth of 4.8 percent this year, up from 4.6 percent.

Power Houses

Nations such as China and Brazil have powered the return to growth, widening a gap with advanced economies from Europe to the U.S. that are struggling to revive domestic demand, the IMF said. Developing nations will grow 6.4 percent next year, unchanged from the previous forecast, while advanced economies will expand 2.2 percent, down from an earlier 2.4 percent forecast, the IMF said.

“Structurally, emerging nations are likely to remain in the driving seat of global growth,” said HSBC’s King. “Having embarked on economic catch-up, helped by heightened capital flows and far greater political openness, the chances are that productivity-driven growth in the emerging nations will continue to outpace the rate of expansion in the developed world.”

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Emerging markets probably grew in the third quarter at the slowest pace in more than a year as global trade lost steam, HSBC PLC said.The HSBC Emerging Markets Index, compiled by London-based Markit Economics based on monthly purchasing managers indexes for manufacturing...
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2010-21-07
Thursday, 07 Oct 2010 03:21 PM
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