## Growth Surprises and Synchronized Slowdowns in Emerging Markets––An Empirical Investigation

_IMF Working Papers, September 17, 2014_

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## Bibliographic details
- Authors: Ghada Fayad, Roberto Perrelli
- Published: September 17, 2014
- Series: IMF Working Papers
- DOI: https://doi.org/10.5089/9781498335836.001

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### Summary findings
- Output growth has slowed in several emerging markets since 2011—a remarkable feature for a non-crisis period in EMs.
- Such synchronized slowdowns were largely unanticipated by scholars and forecasters.
- The paper investigates main drivers of growth surprises and synchronized slowdowns in emerging markets post-global financial crisis.

### Empirical drivers identified
- External factors:
  - Lower trading partner demand was a key external factor in explaining these events during 2011–13.
  - Changes in external financing conditions have yet to play a role in EMs’ growth (no role identified in the period studied).
- Domestic factors:
  - The withdrawal of the fiscal stimulus put in place right after the Lehman collapse is a relevant aspect in these episodes, compounding the effect of weaker external demand.
- Idiosyncratic factors:
  - Structural bottlenecks with the potential to impair growth in a more lasting fashion seem to partly explain these events.
  - These idiosyncratic effects are reflected in larger residuals found in regression-based estimates for certain countries.

### Policy implications and interpretation
- Policy attention should consider both external demand weakness (trading partner demand) and domestic fiscal policy shifts (withdrawal of post-Lehman stimulus) when explaining post-2011 EM slowdowns.
- Idiosyncratic structural constraints warrant country-specific diagnosis given their contribution to residual growth shortfalls in regression estimates.

### Publication and metadata
- Authors: Ghada Fayad, Roberto Perrelli
- Date: September 17, 2014
- Series: Working Paper No. 2014/173
- Issue: 173
- Volume: 2014
- Pages: 24
- DOI: https://doi.org/10.5089/9781498335836.001
- Stock No: WPIEA2014173
- ISBN: 9781498335836
- ISSN: 1018-5941
- Subject areas: Emerging and frontier financial markets; Exchange rate arrangements; Financial crises; Financial markets; Foreign exchange; Global financial crisis of 2008-2009; Output gap; Production
- Keywords: debt profile; EM Europe; EM recovery; Emerging and frontier financial markets; Emerging market; emerging market economy; Exchange rate arrangements; financial crisis; fiscal policy; Global; Global financial crisis of 2008-2009; growth deceleration; growth slowdown; growth surprise; growth surprises; Output gap; trading partners; trading partners’ demand; WP

*Source: IMF Working Paper "Growth Surprises and Synchronized Slowdowns in Emerging Markets––An Empirical Investigation" by Ghada Fayad and Roberto Perrelli, September 17, 2014.*

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_Source: https://www.imf.org/en/publications/wp/issues/2016/12/31/growth-surprises-and-synchronized-slowdowns-in-emerging-marketsan-empirical-investigation-41923_