Slowdown in Emerging Markets

By Isaac Cohen*

Last week, the International Monetary Fund released a staff discussion note on the growth prospects for emerging market economies. The report’s main conclusion is that after the last decade of strong growth performance, since 2010-11, emerging economies are experiencing a slowdown. The report estimates the slowdown is synchronized, because it includes 80 percent of those economies, with an average decline in growth of 1.5 percent by the end of 2013.

Some of the major emerging economies are growing less. For instance, since 2010, China’s growth has declined 2.25 percent, to 7.75 in 2013. The same is the case in Brazil, with a decrease in economic growth of 2.75 percent, to last year’s 2.25 percent.

The synchronized slowdown is largely explained by weaker external demand among main trading partners, particularly in advanced economies and China. This represents a substantial change from the factors explaining the intense growth of the last decade, because favorable external conditions explained almost half of the economic growth spurt in emerging markets.

According to the report, these favorable external conditions, “are not expected to prevail in the coming years.” There will be less growth in international trade, tighter financing conditions and lower commodity prices, which in the near term will contribute to lower growth rates among emerging market economies.

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

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