Emerg­ing mar­kets face un­even out­look

The Myanmar Times - - International Business -

DE­VEL­OP­ING na­tions con­tinue to be the back­bone of global growth, but face a se­ries of head­winds in­clud­ing a slow­down in China, weak de­mand in ad­vanced economies, low com­mod­ity prices and po­lit­i­cal strife, the In­ter­na­tional Mon­e­tary Fund warned.

The IMF said the out­look for emerg­ing mar­kets was lop­sided, with In­dia a bright spot but sub-Sa­ha­ran Africa en­dur­ing ei­ther tepid growth or re­ces­sion as they are hit by a low de­mand for raw ma­te­ri­als.

Once con­sid­ered a key driver of global growth, de­vel­op­ing na­tions have been bat­tered since the fi­nan­cial cri­sis, as cru­cial cus­tom from sput­ter­ing Western economies has dried up, while gov­ern­ments strug­gle with huge debts.

In an up­date to its World Eco­nomic Out­look the IMF said emerg­ing economies had en­joyed “a pe­riod of rel­a­tive calm in re­cent months” af­ter the global tur­moil un­leashed at the start of the year by wor­ries over China’s econ­omy.

It also in­creased its fore­cast for ex­pan­sion this year in de­vel­op­ing na­tions, to 4.2 per­cent from 4.1pc es­ti­mated in July, say­ing they would make up more than three-quar­ters of pro­jected world growth.

But it also said, “The out­look for these economies is un­even and gen­er­ally weaker than in the past. While ex­ter­nal fi­nanc­ing con­di­tions have eased with ex­pec­ta­tions of lower in­ter­est rates in ad­vanced economies, other fac­tors are weigh­ing on ac­tiv­ity.”

The Fund said the lower com­mod­ity prices had boosted In­dia, where growth hit 7.6 per­cent last year and a num­ber of struc­tural re­forms had been im­ple­mented.

How­ever, it warned, fur­ther mea­sures were needed to boost jobs, while the cen­tral bank should con­tinue with its own re­form agenda.

In­dia’s cen­tral bank cut in­ter­est rates to a six-year low of 6.25pc on Oc­to­ber 4 to boost do­mes­tic spend­ing and in­vest­ment.

The IMF tipped growth of 7.6pc this year and next, up from 7.4pc pro­jected in July. –

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