Contribution of developing countries to world growth has decreased

FOTO CThe industrial production of developing countries continued to slow down at the beginning of 2015 in line with the deceleration trend of 2014. Developed countries had stronger activity in the first quarter than a year ago, according to the newspaper Valor Econômico, 06/04/2015.

Capital Economics Purchasing Managers Index (an economic indicator derived from monthly surveys of private sector companies) shows that industrial activity in emerging countries fell from 50.7 % in February to 49.8 % in March. This result is strongly influenced by the weakness of China, Brazil and Russia.

Brazilian production worsened significantly. China published decelerating growth numbers for the first quarter due to the housing market crisis and Russia is plunging into recession, despite increased military spending.

In contrast, India, Mexico and Central Europe show good industrial activity performance. Eurozone’s industrial production rose and G-7 industrialized economies have accelerated their growth. However, the overall real growth of emerging countries for 2015 should stand around 4.0 % versus 4.5 % in 2014.

Emerging currencies depreciated, on average, by 20 % last year, contributing to a rise in inflation by 4.9% year-over-year (yoy) in February, versus 4.6 % yoy in January. As a result of these factors, the contributions of developing countries to world growth has decreased.

This is partly a consequence of the significant drop in oil prices and other commodities, as well as the smaller contribution of world trade to the global economic growth.