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Summary of FLASH ECONOMICS ECONOMIC RESEARCH (July 16, 2015 - No. 570)

Core Content

This research report examines the resilience of 12 out of 24 emerging countries, which have demonstrated steady growth and the ability to weather global economic crises. The focus is on identifying the factors contributing to this resilience.

Resilient Emerging Countries

The following 12 countries (regions) are identified as resilient due to their stable GDP growth and low variability:

• Mexico
• Chile
• Poland
• South Africa
• India
• South Korea
• The Philippines
• Indonesia
• Malaysia
• Vietnam
• China
• Africa

Main Factors Contributing to Resilience

The report evaluates four key factors that may explain the resilience of these countries:

1. Efficient Exchange-Rate Management

• Exchange rate stability plays a role in 6 out of 12 countries.
• Correlation between GDP growth and exchange rate fluctuations is shown in Table 2, with varying degrees of correlation across countries.

2. Countercyclical Economic Policies

• Monetary Policy: 4 out of 12 countries exhibit countercyclical monetary policies.
• Fiscal Policy: 9 out of 12 countries show countercyclical fiscal policies, indicating that fiscal deficits tend to increase during periods of economic slowdown.

3. Steady Growth in Productivity and Real Wages

• Productivity and real wage growth are strong in 6 out of 12 countries.
• Table 4 reveals a strong correlation between GDP growth and productivity/real wage growth in most resilient countries.

4. Low Weight of Exports

• Only 3 out of 12 countries have a low weight of exports, which helps protect against global economic fluctuations.

Key Findings

• Fiscal policy is the most consistently important factor, influencing 9 out of 12 resilient countries.
• Productivity gains and exchange rate management are also significant contributors, each affecting 6 out of 12 countries.
• Monetary policy is relevant for 4 countries, while low export weight is relevant for 3.
• India, Indonesia, and Africa are noted for having a low export weight, which contributes to their resilience.

Table of Resilience Characteristics

Key Insights from the Data

• Fiscal Policy: Strong countercyclical fiscal policy is a key driver of resilience in most of the 12 countries.
• Productivity Growth: Countries like India, South Korea, and Vietnam show strong and steady productivity growth, which supports economic stability.
• Exchange Rate Management: Efficient exchange rate management helps in stabilizing growth in countries such as Mexico, Chile, and Poland.
• Export Dependency: Countries with a low export weight (India, Indonesia, Africa) are more resilient to global economic shocks.

Conclusion

The report concludes that the resilience of some emerging countries can be attributed to a combination of factors, with fiscal policy being the most influential. Other contributing factors include exchange rate management, monetary policy, and productivity growth. Low export weight also plays a role in protecting these economies from global downturns.

Disclaimer

• This document is intended for professional and qualified investors only.
• It is confidential and must not be disclosed to third parties without prior written consent.
• The information is based on public data and does not constitute a financial recommendation.
• No liability is accepted for any decisions based on this report.
• The views expressed reflect those of the authors and are not necessarily those of Natixis or any other party.