Emerging markets are facing growth slowdown, says IIF

London

THE Institute of International Finance (IIF) fears that many emerging markets (EMs) are encumbered by "secular stagnation". Since the financial crisis of 2008 to 2009, developed nations' growth has outpaced the growth of emerging markets.

"The term 'secular stagnation' is typically used in the context of the US or other advanced countries, to describe the subdued pace of growth in the years since the global financial crisis," says Robin Brooks, managing director & chief economist of the IIF. "Emerging markets should have not stagnated as they have young populations and capital that should drive development."

In the past six years however, growth in many emerging markets has fallen far more sharply than in advanced economies, Mr Brooks estimates. Much of the slowing has come about because of "large drops in investment", although consumption has held up "remarkably well", he says. In part, this reflects the decline in commodity prices from before the Great Recession,…