Emerging market growth is sputtering.
There has been plenty of chatter about China but the story is far bigger than one country. Is there a single emerging market country that’s put in surprisingly good growth this year? I’m sure there is one but as a whole it has been a parade of disappointment.
Today, Russian reported Q2 GDP growth at just 1.2% y/y compared to 1.6% in Q1. Brazil also cut its 2013 GDP estimate to 2.1% from 2.3% (and 2014 to 1.7% from 2.2%). Update: And now JPMorgan has cut its 2013 forecast for Mexico to 2.4% from 2.8%.
Here is the progression in IMF global and EM/developing world forecasts for 2013 since January:
- Jan – World 3.5%, EM 5.5%
- April – World 3.3% EM 5.3%
- July – World 3.1% EM 5.0%
They’re now on the wrong side of the consensus in a handful of large EM countries, including a fanciful 7.8% forecast for in China and 2.5% for Brazil.
What’s one takeaway? Oil at $105 doesn’t make much sense. Commodity currencies are bouncing now but at some time in the not-to-distant future (Sept?) they’ll be a screaming sell.
