After a decade of high growth and a swift rebound after the collapse of U.S. investment bank Lehman Brothers, emerging markets are seeing slowing growth. Their average growth is now 1½ percentage points lower than in 2010 and 2011. This is a widespread phenomenon: growth has been slowing in roughly three out of four emerging markets. This share is remarkably high; in the past, such synchronized and persistent slowdowns typically have only occurred during acute crises.
Our analysis attributes the slowdown in part to cyclical forces, including softer external demand and in part to structural bottlenecks, for example in infrastructure, labor markets, power sector. And this has happened in spite of supportive domestic macroeconomic policies, (still) favorable terms of trade, and easy financing conditions, which only began to tighten recently. However, a non-trivial portion of the slowdown remains unexplained, suggesting that other factors common to emerging markets are at play.
Filed under: Economic Crisis, Economic outlook, Economic research, Emerging Markets, Employment, Financial Crisis, growth, International Monetary Fund, Public debt | Tagged: emerging market, interest rates, macroeconomics, policy, Program of Seminars, trade | 5 Comments »