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Thursday, 19 April 2018

Is emerging market growth nearing a peak?

Is emerging market growth nearing a peak? That’s what some research seems to suggest. As we reported yesterday, both the IMF and the IFF see emerging markets growth accelerating (or at least holding steady) this year and next, but data compiled by UBS indicates that despite y-o-y growth figures in EMs, quarterly economic growth actually slowed towards the end of 2017 to 3.3% in the fourth quarter, from 4.1% in the third. “The slowdown was particularly acute in emerging Asia, where q-o-q growth fell from 6.6% to 5.1%, with every country bar Indonesia slowing, while the nascent recoveries in Brazil and Russia appeared to stall,” says the Financial Times. “‘Commodity producing economies, having driven the earlier acceleration in EM GDP growth, have disproportionately lost momentum,’” explains UBS’ Head of EM Cross-asset Strategy Bhanu Baweja. This is expected to “put more onus on manufacturing economies to support broader EM growth,” says Lazarde Asset Management’s James Donald, who believes that developing economies will still see a “small pickup” in growth this year.

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