Without a strong rebound in the second half of the year, the global economy is set to record weaker growth in 2015 than in 2014, says Standard Life Investments.
Standard Life Investments, in a recent Global Overview, said emerging markets are substantiating themselves as a trouble spot when it comes to economic growth.
While developed economies are far from booming, conditions look great when compared with the emerging world, the report said.
“Latin America has been under pressure for some time but conditions in Asia are also now deteriorating,” the report said.
China’s stock market experienced significant volatility in July, with growth only remaining stable in Q2 due to contributions from financial services.
Singapore and Taiwan saw growth decline in the second quarter, which was attributed to headwinds from weak global trade and poor domestic demand.
“This is a pattern we expect to see repeated in other countries in the region over the next few weeks, including Korea and Japan.
"The latter is perhaps the most worrying,” the report stated.
According to the report, household spending in Japan dropped 2.6 per cent month-on-month in June.
“It was probably too optimistic to expect Japanese exports to buck the global trend, even with its weak exchange rate, but declining consumer spending in the face of solid real income gains is puzzling to say the least,” Standard Life Investments said.
“If things do not turn around quickly, [prime minister] Abe’s economic strategy will come under greater scrutiny.”
The report pointed out that most of the economies growing above trend in Q2 were in Europe.
To be specific, Spanish GDP increased four per cent in Q2 following a 3.6 per cent increase in Q1.
“Certainly, there are parts of Europe that are responding strongly to the extremely accommodative policy settings in place at present,” the asset manager said.