150624 update emerging markets

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Group Economics Emerging Markets

Emerging Markets Outlook Different growth paths

Marijke Zewuster T: +31 (0)20 383 05 18 marijke.zewuster@nl.abnamro.com

24 June 2015 

Growth in many emerging markets disappoints again in 2015

Since our November 2014 edition, we have lowered our growth forecasts for Latin America and Emerging Europe

Growth in Asia will more or less stabilise overall, with India being the fastest grower

We expect a recovery in Latin America and Eastern Europe in 2016, but downside risks are considerable across the board

Growth disappoints again

in 2015, but after a disappointing first quarter we are now

While regional growth in Asia has remained markedly stable in

forecasting 2.7% growth for 2015. This is in contrast to the

recent years, at an average rate of around 6.4%, trends in

eurozone, which is faring slightly better than expected. We

Eastern Europe and Latin America are declining. In Eastern

expect growth here to improve from 0.9% in 2014 to 1.8% in

Europe, growth fell from a meagre 1.8% in 2013 to 1.3% in

2015 (rather than 1.5% as forecast in November).

2014 and we actually expect a contraction of around 1% this

Overall, world growth is likely to come out just a meagre 3%

year. In Latin America, growth dropped from 2.4% to 1% in the

for the fourth year running in 2015, with emerging market

same period and, with a little luck, will remain just above 0% in

growth expected to fall from 4.6% in 2012 to just below 4% in

2015. The divide among the BRIC countries has continued to

2015, and growth in advanced economies to increase from

widen, with Brazil and Russia likely to see their economies

1.2% to 2.2%. So, although emerging markets still account for

contract this year, while China and India are still showing

the bulk of world growth, advanced economies are gradually

growth rates of around 7%.

making a bigger contribution.

Divide between BRIC countries widens

Slowdown in growth emerging markets

GDP growth, % yoy

GDP growth, % yoy

16

10

12

8

8

6

4

4

0

2 0

-4

-2

-8 07

08

09

Brazil

10

11

China

12 India

13

14

15

16

Russia

07

08

09

10

11

EM

12

13

14

15

16

Developed

Sources: ABN AMRO Group Economics, EIU

Source: ABN AMRO Group Economics

Disappointing growth in Eastern Europe is due mainly to

Emerging Europe: Large differences in growth

Russia and Ukraine. In Latin America, existing structural

Since our November edition, we have lowered our 2015

imbalances are exacerbated by a strong decline in confidence

growth forecast for Eastern Europe from 1.8% to -0.9%. Not

driven by domestic political developments, reinforcing the

surprisingly, the outlook for Russia and Ukraine, in particular,

negative impact of lower commodity prices and rising risk

has been revised downwards. While in November we still

aversion.

expected growth in Russia to stabilise at low levels and Ukraine to show a recovery, we now believe Russia’s

Other factors include falling growth momentum in the US and less strong growth in global trade. In November, we expected US economic growth to strengthen from 2.4% in 2014 to 3.8%

economy will contract by 4% and Ukraine’s by 10% this year.


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