Emerging market growth slows to over four-year low: HSBC

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HSBCEmerging market economic activity grew at the slowest pace in over four years according to a monthly report published by HSBC Holdings PLC dated July 4, 2013.  The HSBC Emerging Markets Index (EMI) is a gauge derived from the monthly PMI™ surveys that gauge economic activity.

The index gauge is designed to show readings above 50 indicating an expansion in growth and a reading below 50 is designed to show an overall contraction in growth.

In June the index sank to 50.6, from 51.3 in May, indicating that only a marginal increase was seen in output across global emerging markets.  This latest reading of the gauge was the lowest output in the current sequence of growth since May 2009, the report stated.

Growth across emerging markets suffered as output from China fell to the lowest level since August 2012 in addition to stagnated growth in Russia, and weak output from India and Brazil.

HSBC“Last year, emerging market policymakers had the excuse of the euro-zone crisis to explain what appeared to be a trade-related temporary setback. Now, with euro-zone financial strains having eased, weakness in the emerging world appears to be more a home grown affair,” HSBC Global Chief Economist Stephen King said.

In the report Mr. King states the reasons for weakness in emerging markets is driven by three changes in the global economy since the start of the year.

First, the expectation that the US Federal Reserve will wind down its bond-buying programme.  Second, China’s widespread deceleration from rapid economic expansion in previous years. Third, emerging economies are now finding it harder to fund balance of payment deficits as the U.S. FED is closer to starting to tapering its monetary easing.

“Longer-term prospects for the emerging world remain encouraging. The latest setbacks should be seen primarily as growing pains,” the report states.

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Reading Time: 2 minutes

Emerging market economic activity grew at the slowest pace in over four years according to a monthly report published by HSBC Holdings PLC dated July 4, 2013.  The HSBC Emerging Markets Index (EMI) is a gauge derived from the monthly PMI™ surveys that gauge economic activity.

Reading Time: 2 minutes

HSBCEmerging market economic activity grew at the slowest pace in over four years according to a monthly report published by HSBC Holdings PLC dated July 4, 2013.  The HSBC Emerging Markets Index (EMI) is a gauge derived from the monthly PMI™ surveys that gauge economic activity.

The index gauge is designed to show readings above 50 indicating an expansion in growth and a reading below 50 is designed to show an overall contraction in growth.

In June the index sank to 50.6, from 51.3 in May, indicating that only a marginal increase was seen in output across global emerging markets.  This latest reading of the gauge was the lowest output in the current sequence of growth since May 2009, the report stated.

Growth across emerging markets suffered as output from China fell to the lowest level since August 2012 in addition to stagnated growth in Russia, and weak output from India and Brazil.

HSBC“Last year, emerging market policymakers had the excuse of the euro-zone crisis to explain what appeared to be a trade-related temporary setback. Now, with euro-zone financial strains having eased, weakness in the emerging world appears to be more a home grown affair,” HSBC Global Chief Economist Stephen King said.

In the report Mr. King states the reasons for weakness in emerging markets is driven by three changes in the global economy since the start of the year.

First, the expectation that the US Federal Reserve will wind down its bond-buying programme.  Second, China’s widespread deceleration from rapid economic expansion in previous years. Third, emerging economies are now finding it harder to fund balance of payment deficits as the U.S. FED is closer to starting to tapering its monetary easing.

“Longer-term prospects for the emerging world remain encouraging. The latest setbacks should be seen primarily as growing pains,” the report states.

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