EM growth outpacing developed economies

By Reporter
 — 1 minute read

Emerging market economies are likely to grow at almost twice the pace of developed economies in 2016, according to AllianceBernstein.

Global economic growth will be relatively modest throughout 2016, with AllianceBerstein's (AB's) outlook of 3.6 per cent growth for developing economies outpacing developed market growth (1.9 per cent).

In its Global Economic Outlook for April 2016, AB maintained its growth estimate for the remainder of the year.


"Although the global growth backdrop is uneven, there have been some encouraging developments that could signal acceleration in the coming quarters," said the report.

First, while there has been a "broad rebound" in spot commodity prices over the past three months, it is too early to say with any confidence if it signals a faster turn in global economic activity, said AB.

"Second, weak growth and a strong currency have hurt the US manufacturing sector. But the negative effect on production and orders seems to be fading," said the report.

"The March survey of purchasing managers showed a decisive turn in domestic and export orders, pushing the combined total to its highest reading since late 2014.

"Third, Chinese data still support our expectation that the economy will muddle through, with gross domestic product (GDP) growth averaging about 6.3 per cent.

"While that won’t lift global growth, it does remove downside risk. A positive catalyst would be a rebound in export growth, but none of the key metrics that we follow suggest that’s in the cards."

Finally, AB said that despite improvement in the US labour market and a rebound in wages/inflation, the Federal Reserve has been sounding more dovish lately about hikes to US interest rates.

"The tilt toward a more accommodative stance sapped some of the US dollar’s recent strength, and that in turn bolsters the recent upswing in commodity prices and emerging-market economies," AB said.

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