2016年-ECB欧洲央行_The_slowdown_in_emerging_market_economies_and_its_implications_for_the_global_economy_15页_235kb

Summary of the Slowdown in Emerging Market Economies and Its Implications for the Global Economy

Core Content

Emerging market economies (EMEs) have historically been a key driver of global growth, but since 2010, their growth has slowed significantly. This slowdown has had a notable adverse impact on the euro area, particularly on exports, although some offset has come from lower commodity prices. The decline in EME growth is attributed to both structural and external factors, including reduced capital accumulation, lower productivity gains, and tighter global financing conditions.

Main Factors Contributing to the Slowdown

• Structural Factors:

  • A moderation in potential growth due to diminishing capital accumulation and productivity gains.
  • Waning global trade integration, particularly in EMEs.
  • Favourable demographic trends have weakened in some countries, with a decline in the working-age population.
  • In China, excess capacity and misallocation of resources have emerged as key issues.
  • In Russia, energy price declines and geopolitical tensions have hindered growth.
  • In Brazil, reduced commodity prices have affected investment in key export sectors.
  • In India, potential growth has remained robust due to favourable demographics and structural reforms.

• External Factors:

  • Global Trade: Trade volumes have grown at rates below historical norms, with a notable decline in trade with China.
  • Commodity Prices: Sharp declines in oil and other commodities have affected EMEs differently—exporters face deteriorating terms of trade, while importers benefit from lower real disposable incomes.
  • Global Financing Conditions: Tightening of global financing conditions since 2013, including the "taper tantrum" of 2013 and the subsequent increase in US interest rates in 2015, have constrained EMEs' access to capital.
  • Capital Flows: Net capital outflows have increased, particularly in China, with EMEs experiencing currency depreciation and financial market volatility.

Financial Cycle and Output Gaps

• The finance-adjusted output gap model suggests that financial factors, including credit growth and capital inflows, have played a significant role in EMEs' economic performance.
• Financial cycle information explains part of the cyclical movements in output for most EMEs.
• Since the global financial crisis, the finance-adjusted output gap has diverged from traditional measures like the Hodrick-Prescott filter.
• The model highlights that EMEs' growth was partly driven by overheating, with reliance on strong credit growth after the crisis.

Risks and Vulnerabilities

• External Vulnerabilities:

  • EMEs have increased their external debt, especially in USD-denominated forms, which raises the risk of currency mismatches and higher servicing costs.
  • Currency depreciation can exacerbate balance sheet weaknesses and increase economic fragility.
  • Many EMEs have substantial foreign exchange reserves, which can act as a buffer against external shocks.

• Domestic Vulnerabilities:

  • Policy buffers have been eroded, and macroeconomic imbalances have increased.
  • Fiscal deficits are widespread among large EMEs, with commodity-exporting economies facing severe fiscal pressures due to falling revenues.
  • Monetary policy is increasingly constrained in some EMEs due to fixed exchange rates or high inflation.

• Risk of Abrupt Tightening:

  • A sudden deterioration in global risk sentiment could lead to sharp capital outflows and currency depreciation.
  • The 2013 "taper tantrum" showed how sensitive EMEs are to shifts in global monetary policy.
  • Central banks may be forced to tighten monetary policy to prevent financial instability in the most affected countries.

Implications for the Global Economy and the Euro Area

• The slowdown in EMEs has already dampened global growth and negatively impacted the euro area, particularly through reduced exports.
• A further pronounced slowdown in EMEs could have a significant adverse effect on the global economy.
• EMEs' economic performance is closely linked to the euro area through trade and financial channels.
• The euro area may face additional challenges if EMEs experience a sharp downturn, including reduced demand and financial market volatility.

Conclusion

The slowdown in EMEs is a multifaceted issue, driven by structural and external factors. While some EMEs have shown resilience, others remain vulnerable to financial and macroeconomic shocks. The global economy and the euro area are closely interconnected with EMEs, and a further downturn could have far-reaching consequences. Policymakers must remain vigilant and prepared to address the risks posed by the current economic environment.