Maintaining the Emerging-Economy Growth Engine
The emerging economies – which just a few years ago were being hailed for their resilience in the face of a global economic meltdown – are now facing myriad economic challenges, reflected in significantly slower GDP growth. Is the world's emerging-economy growth engine breaking down?
SEOUL – The world’s emerging economies seem to be losing their dynamism. Countries that only a few years ago were being hailed for their resilience in the face of a global economic meltdown are now facing myriad challenges, reflected in significantly slower GDP growth. Is the emerging-economy growth engine breaking down?
From 2000 to 2007, annual growth in emerging and developing economies averaged 6.5%. More impressive, from 2008 to 2010, when the advanced economies were in recession or struggling through a fragile recovery, they managed to sustain 5.5% growth. In fact, at the end of that period, average growth stood at a very healthy 7.5%.
But then growth began to slow, with the annual rate falling to 4% in 2015. Even China, the largest and most dynamic emerging economy, recorded its lowest growth rate since 1990 (6.9%) last year, and the slowdown is forecast to accelerate this year. Many now argue that the emerging economies are settling into a “new normal” of slower growth, and that their days as the key driver of the global economy are over.