Slowdown in Emerging Markets: Sign of a Bumpy Road Ahead?
IMF Working Papers, November 14, 2014
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- Slowdown in Emerging Markets: Sign of a Bumpy Road Ahead?
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Bibliographic details
- Authors: Evridiki Tsounta
- Published: November 14, 2014
- Series: IMF Working Papers
- DOI: https://doi.org/10.5089/9781498304719.001
Overview
- Following very strong growth during the period 2000–12, emerging market economies (EMEs) experienced a slowdown in the last couple of years.
- The paper examines the supply-side drivers of the strong growth performance of 63 EMEs and investigates whether the recent slowdown in growth is transitory or more permanent.
- 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.
Key findings
- On average the recent slowdown is explained equally by structural and cyclical factors.
- There are large variations across countries and regions in the relative importance of structural versus cyclical drivers.
- 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.
- Projected constraints:
- Moderation of capital accumulation.
- Natural constraints on labor.
- Policy-relevant condition:
- Repeating the 2000–12 growth momentum requires significant improvement in TFP performance via structural reforms.
Policy implications and recommendations
- Use countercyclical policies to address the cyclical component of the slowdown, where sufficient policy space exists.
- Prioritize structural reforms to improve total factor productivity (TFP) because structural bottlenecks are not easily corrected by cyclical policy alone.
- Prepare for a lower baseline growth trajectory absent substantial TFP gains, given moderation in capital accumulation and labor constraints.
Scope, subjects, and keywords
- Scope: Supply-side drivers of growth for 63 EMEs; assessment of transitory versus permanent slowdown.
- Subjects: 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.
Evridiki Tsounta. "Slowdown in Emerging Markets: Sign of a Bumpy Road Ahead?", IMF Working Papers 2014, 205 (2014), accessed 9/17/2026, https://doi.org/10.5089/9781498304719.001
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- _wp14205 - References