Emerging Markets: Steady growth masks mixed trends in different markets - NAB
|Industrial production and export volumes provide a timely indication of economic activity in emerging market economies, according to analysts at NAB.
Key Quotes
“According to the CPB measure, there has been little acceleration in the growth of industrial production in recent months – with year-on-year growth remaining around 4.2% (on a three month moving average basis) – around the same rates seen since the start of the year. While export volumes are relatively strong year-on-year (up 5.5% in August), they have been stagnant in recent months – with the bulk of the increase having occurred between October and December last year.”
“This flat growth profile masks mixed industrial production trends in major emerging markets. The main improvement has been in Brazil – as the economy has recovered from a deep recession – with production increasing by 3.1% yoy (3mma) in September (the strongest rate of growth since mid-2013). In contrast, there has been a noticeable slowdown in industrial growth in India and South Africa since the middle of 2016, while Indonesian growth has stabilised around 5%. In China – the world’s largest economy – industrial production growth has trended around 6¼% yoy since early 2015.”
“China’s economic growth slowed marginally in Q3 – at 6.8% yoy (compared with 6.9% across the first half of the year). Industrial activity is likely to slow in Q4 – with Chinese authorities ordering the shutdown of a sizeable share of steel production capacity to address pollution concerns during the northern winter.”
“China’s latest indicators point to a modest slowing trend following the recent leadership change, which could flow through into weaker demand for imports from other emerging markets.”
“Industrial production in East Asia has picked up in recent months particularly in the more export orientated economies with a heavy reliance on the electronics sector. While Brazil’s recovery has driven Latin American output higher. East Asia and Latin America are highly trade exposed with large commodity sectors and some of the strength in export values appears to be commodity price related. These regions will hope that demand from advanced economies offsets any slowdown in import demand from China.”
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.