So much so that, over the past four years, Asia led by China and, to a lesser extent Latin America, have become the engines of global growth.
But those hoping that the emerging markets will continue to act as a panacea to the western world’s ills might be headed for disappointment.
While authorities in Europe and the US fight to stave off a double-dip recession and deflation, emerging markets’ policymakers are battling the opposite problems – overheating economies and runaway inflation.
Over the past 18 months, a number of countries, including China, India and Turkey, have adopted a range of measures including interest rate increases, a tightening of bank reserve requirements and price controls to stem the tide.
While these appear to be taking effect, with input-cost inflation in emerging markets at its tamest in two-and-a-half years according to HSBC, this achievement has come at a cost.
Recent purchasing managers’ index data, compiled by the UK bank and Markit, show that emerging market growth is at its lowest level in two years. The moderation is evident across all regions, led by a weaker increase in manufacturing production and reduced export orders in China, Brazil and Russia.
