In a recent global overview, Standard Life Investments said the export of goods and services within the eurozone accounts for 26 per cent of GDP, making the region sensitive to fluctuations in global trade and demand.
The report noted that the exposure of eurozone states to weakening emerging markets activity varies between countries.
According to the report, Germany and Italy send 37 per cent of their exports to emerging economies.
Luxembourg directs 21 per cent of its exports to emerging markets, with Belgium and Ireland at 25 per cent.
“Headwinds from weak [emerging markets] economic growth partly blunt the benefits of a weak euro and will weigh on net exports,” the report stated.
However, the pick-up in domestic consumption within the eurozone has partially mitigated some of the concerns regarding the export sector.
Domestic consumption is increasingly supported by loose monetary policy, neutral fiscal policy and a healthier banking sector.
“Furthermore, the downward leg in commodity prices should boost consumer spending,” the report said.
Standard Life Investments concluded that the stress in emerging economies would have to increase in order to impact more heavily on eurozone economies and begin to fracture positive domestic foundations.
“Overall, we would probably need to see a bigger shock in the emerging world to undermine growth.”
The report also pointed out the extent of China’s import contraction within Asia.
Exports to China fell 10 per cent from Taiwan, 10 per cent from the Philippines, 1.3 per cent from Korea, 6.2 per cent from Thailand and 14 per cent from India.
Standard Life Investments said the extent of China’s slowing domestic demand is clearly highlighted by its import contraction.
“Most importantly, for other [emerging market] countries, specifically those that have relied on Chinese demand over the past decade, this trend does not appear cyclical,” the report said.
“With investment slowing as part of China’s structural rebalancing, and domestic consumer demand mostly satisfied by domestic manufacturers, import demand will likely remain sluggish.”
