2015年-世界发展银行全球_Slowdown_in_Emerging_Markets___Rough_Patch_or_Prolonged_Weakness__67页_1mb

Summary of "Slowdown in Emerging Markets: Rough Patch or Prolonged Weakness?"

Core Content

This Policy Research Note by Tatiana Didier, M. Ayhan Kose, Franziska Ohnsorge, and Lei Sandy Ye analyzes the slowdown in emerging market (EM) growth since 2010, exploring its characteristics, drivers, policy responses, and future risks. The report emphasizes the need for a balanced approach between cyclical and structural policies to address the challenges and promote sustainable growth.

Main Characteristics of the Slowdown

• Synchronous and Protracted: The slowdown has affected a large number of EM, especially the major ones, and has been unusually synchronized across countries.
• Below Long-Term Averages: EM growth has fallen below its long-term average (1990-2008) and pre-crisis (2003-08) rates, with the slowdown becoming more pronounced by 2014.
• Broad-Based Domestic Slowdown: The slowdown has impacted all components of demand, including investment and exports, which have declined sharply. Private and government consumption has also slowed, though less dramatically.
• Continuing Trend: Growth forecasts for 2015 have been repeatedly revised downward, indicating that the slowdown may not be temporary but could signal a new era of weak growth.

Key Drivers of the Slowdown

The slowdown is attributed to both external and domestic factors:

External Factors

• Weak Global Trade: Global trade has weakened, which has had a negative impact on EM economies.
• Low Commodity Prices: The decline in commodity prices has reduced export revenues and affected the growth of commodity-dependent EM.
• Tightening Financial Conditions: Global financial conditions have tightened, limiting access to capital and increasing borrowing costs.

Domestic Factors

• Slowing Productivity Growth: Productivity growth has decelerated, contributing to the decline in potential growth.
• Policy Uncertainty: Political and policy uncertainty has affected investor confidence and economic stability.
• Eroding Policy Buffers: Fiscal and monetary policy space has shrunk, limiting the ability to respond to economic shocks.

Policy Responses

To address the slowdown, the report outlines both cyclical and structural policy options:

Cyclical Policies

• Fiscal Policy: Expansionary fiscal policy can be effective in stimulating growth, especially in countries with sufficient fiscal space. Fiscal multipliers vary, ranging from 0 to 2.5 depending on the fiscal balance.
• Monetary Policy: Monetary policy options differ between commodity-importing and exporting countries. Commodity-importing countries have more room to cut interest rates, while commodity-exporting countries face inflationary pressures and have limited flexibility.

Structural Policies

• Reforms: Structural reforms in fiscal, labor, and product markets can enhance growth prospects. Improving the business environment and governance reforms are particularly important.
• Investment Climate: Policies that improve infrastructure, access to electricity, and labor market efficiency can boost productivity and growth.
• Governance Reforms: Governance reforms have historically been associated with higher growth rates, and improving governance quality is essential for long-term growth.

Risks Down the Road

The report identifies three major risks associated with the EM slowdown:

1. Sudden Stops in Capital Flows: Weakening capital flows, combined with global financial volatility, could lead to sudden stops, causing sharp declines in output and investment.
2. Global Recovery at Risk: A prolonged slowdown in EM could undermine the fragile global recovery, especially given their growing importance in the global economy.
3. Poverty and Living Standards: Weak growth in EM makes it harder to reduce poverty and improve living standards.

Conclusion

The slowdown in EM since 2010 represents a significant shift from the "golden era" of high growth. While the slowdown has been synchronous and persistent, it is not clear whether it is a temporary setback or the start of a prolonged period of weak growth. EM have made progress in macroeconomic stability and integration, but they now face a combination of cyclical and structural challenges. The report concludes that a balanced policy response, incorporating both cyclical stimulus and structural reforms, is crucial to restoring growth and addressing the underlying issues.

Key Takeaways

• The slowdown in EM has been synchronous, protracted, and broad-based.
• It has been driven by external (weak trade, low commodity prices, financial tightening) and domestic (productivity slowdown, policy uncertainty, eroded buffers) factors.
• EM growth is not expected to return to pre-crisis levels in the near term.
• Structural reforms are essential to improve medium- and long-term growth prospects.
• The policy response should combine cyclical and structural measures.
• Emerging markets are at a crossroads, with the potential for either a short-term slowdown or a prolonged period of weak growth.
• A sustained slowdown in EM could have global implications, including risks to recovery and poverty reduction.

Figures and Tables

• Figure 1: Highlights the characteristics of the slowdown, including actual and potential growth trends.
• Figure 2: Outlines policy options and their effectiveness in different contexts.
• Figure 3: Shows the rising share of EM in global GDP.
• Figure 4: Illustrates the slowdown in perspective, comparing EM and AE growth.
• Figure 5: Depicts the growth trends of BRICS economies.
• Figure 6: Provides a breakdown of the components of demand during the slowdown.
• Figure 7: Shows growth performance and prospects for EM.
• Figure 8: Breaks down the external and domestic drivers of the slowdown.
• Figure 9: Reflects the state of global trade.
• Figure 10: Indicates the end of the commodity supercycle.
• Figure 11: Highlights the tightening of financial conditions.
• Figure 12: Shows the slowdown in remittances.
• Figure 13: Depicts productivity growth and factor accumulation.
• Figure 14: Illustrates potential growth in EM.
• Figure 15: Reflects demographic trends.
• Figure 16: Shows policy uncertainty.
• Figure 17: Highlights infrastructure shortages.
• Figure 18: Depicts fiscal policy buffers.
• Figure 19: Shows monetary frameworks and currency regimes.
• Figure 20: Illustrates monetary policy buffers.
• Figure 21: Outlines reform needs.
• Figure 22: Compares growth and governance quality changes.
• Figure 23: Reflects reform progress.
• Figure 24: Shows growth risks down the road.
• Figure 25: Depicts poverty implications.

References

• Authors: Tatiana Didier, M. Ayhan Kose, Franziska Ohnsorge, Lei Sandy Ye
• Approved for distribution by: Kaushik Basu, Chief Economist and Senior Vice President, World Bank
• Source: World Bank Global Economic Prospects (GEP), IMF World Economic Outlook (WEO), Consensus Forecasts, Haver Analytics, and other relevant data sources.

Annexes

• Annex I: Country Classification
• Annex II: The Middle-Income Trap: A Brief Literature Review
• Annex III: Empirical Methodology