HSBC report shows growth slowdown in emerging markets

Posted on 17 Jan 2012

Economic growth and factory output in the emerging markets has declined compared to figures in early 2010, according to figures released by HSBC.

The HSBC Emerging Markets Index, its quarterly assessment of purchasing-managers indexes (PMI) in 16 countries, was little changed in the fourth quarter of 2011, edging up to 52.2 from 52.0 in the previous quarter.

PMI surveys collectively track business conditions at more than 5,800 reporting companies. As a reading of 50 or higher indicates expansion, the figure for the fourth quarter implies a subdued rate of economic expansion.

Although not back to the recession levels recorded in late-2008 and the early months of 2009, the index is now a long way short of the levels reached in the early months of recovery in late-2009 and early-2010.

A decline in manufacturing was a major factor preventing further economic expansion in these markets, HSBC said in its quarterly report on the index.

Emerging-markets manufacturing output fell at the sharpest pace since early 2009 in the fourth quarter, with emerging Asia seeing the weakest activity for the sector. China, Hong Kong, Taiwan and South Korea reported declines in factory output in the last quarter.

The escalation of the eurozone sovereign debt crisis overshadowed markets in the last three months of 2011, but was not a lone factor in subdued emerging-market growth, according the bank’s report.

“The risk of further contagion from the U.S., the U.K. and even the emerging nations themselves weighed heavily on sentiment,” the bank said.

Global trade also slowed last year, and emerging-market economies took steps to cool growth and in turn ease inflationary pressures, the report said.

The upheaval in the Middle East has contributed to increased oil prices, increasing costs and squeezing real incomes elsewhere in the emerging world markets. “With inflation earlier last year at relatively elevated levels, it was inevitable that many emerging nations would have to adopt policies designed both to inhibit growth and to ease price pressures,” said HSBC.