Slump in Emerging Markets

By Isaac Cohen*

The International Monetary Fund has revised downward the last April projections of world economic performance. According to the Fund’s Chief Economist Olivier Blanchard “growth almost everywhere is weaker… particularly noticeable in emerging markets.”

Given the slow growth in some industrialized economies, such as the United States and Japan and recession in Europe, the so called BRICS—Brazil, Russia, India, China and South Africa—became the main sources of economic dynamism, demanding commodities at vigorous rates. This was of great benefit, among others, for South American economies main producers of minerals and staples.

The downward revision of all projections for developing economies means 5 percent global growth is expected for 2013, or 0.3 percent less than predicted in April. Individually, for this year, the Fund expects growth in China at a still robust rate of 7.8 percent, but 0.3 percent less than last April’s forecast. Also, 2.5 percent growth is predicted for Brazil, 0.5 percent less than foreseen in the Spring.

The Fund’s Chief Economist Olivier Blanchard also attributed the slowdown in emerging markets, on the demand side, to lesser exports. This can be seen, for instance, in less demand for Chilean copper, Brazilian iron ore and Argentinean cereals, with consequent decreases in the prices of some of these commodities.

*International analyst and consultant. Commentator on economic and financial issues for CNN en Español TV and radio. Former Director, UNECLAC Washington Office.

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