Major emerging economies posted disappointing performances once again in the second quarter of 2015. Growth was broadly less dynamic than during the first quarter, due to weaker commodities prices and currency depreciation against the dollar, according to a report by credit insurer Coface.
The headlines were essentially dominated by suspicions of further weakness in Chinese growth, where the government fears it will not meet its 7% growth target. Although the slowdown in investments continues and the export growth rate is losing pace, fears are focused mainly on household consumption, even though the slowdown in consumer spending is less marked than in investment, the report states.
“Furthermore, several major emerging economies are in recession, such as Russia, which is under pressure from the weak oil price, economic sanctions and geopolitical issues. The continued slide in the oil price is driving the rouble lower and the central bank is therefore attempting to prevent the public deficit from deteriorating further.”
The recession in Brazil is also a major concern as the domestic economy remains weighed down by weaker commodities prices, a restrictive policy mix (increase of interest rate to 14.25% and measures of fiscal consolidation) and corruption scandals (Petrobras) which led to protests against the president Dilma Rousseff this summer.
India, according to Coface, is the only exception, confirming its healthy results, benefiting particularly from an improved trade balance due to a reduced energy bill. However, a more dynamic economic recovery is being hampered by poor weather conditions and weak external demand.
