Slowdown in Emerging Markets: Sign of a Bumpy Road Ahead?

November 14, 2014

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Format: Chicago

Evridiki Tsounta. Slowdown in Emerging Markets: Sign of a Bumpy Road Ahead?, (USA: International Monetary Fund, 2014) accessed September 19, 2024

Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary

Following very strong growth during the period 2000–12, emerging market economies (EMEs) experienced a slowdown in the last couple of years. This paper examines the supply-side drivers of the strong growth performance of 63 EMEs and investigates if the recent slowdown in growth is transitory or a more permanent phenomenon. We find that on average the recent slowdown is explained equally by structural and cyclical factors, although there are large variations across countries and regions. While the cyclical component of the slowdown can be corrected by countercyclical policies (provided that there is sufficient policy space), structural bottlenecks are harder to address. Given the expected moderation of capital accumulation and some natural constraints on labor, the strong growth momentum of 2000–12 is unlikely to be repeated going forward, unless TFP performance improves significantly via structural reforms.

Subject: Capital accumulation, Emerging and frontier financial markets, Financial markets, Gross fixed investment, Labor, National accounts, Production, Total factor productivity

Keywords: Asia and Pacific, Capital accumulation, CCA region, Central Asia and the Caucasus, Economic growth, EME average, Emerging and frontier financial markets, Emerging market economies, Emerging market economy, Europe, Financial condition, Global, Gross fixed investment, Growth differential, Middle East, Potential growth, Production factor accumulation, Terms of trade, TFP performance, Total factor productivity, WP

Publication Details

Pages:

23
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 2014/205
Stock No:

WPIEA2014205
ISBN:

9781498304719
ISSN:

1018-5941

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