Emerging-Market Growth Probably Slowed to 2-Year Low, HSBC Says

Growth in emerging-market countries probably slowed to its weakest level in two years in the second quarter as the global economic recovery faltered, HSBC Plc said, citing a survey of purchasing managers.

The HSBC Emerging Markets Index, which is compiled by London-based Markit Economics and tracks conditions at more than 5,000 reporting companies, fell to 54.2 from 55 in the previous three months, London-based HSBC said in an e-mailed report today.

“After a strong rebound in the immediate aftermath of the global financial crisis, the pace of activity in the emerging markets has faded,” Stephen King, the lender’s chief economist, said in the report. “In many parts of the emerging world, there has been a noticeable reduction in the growth of export orders.”

The March 11 earthquake and tsunami that hit Japan, causing the worst nuclear accident since Chernobyl, probably also crimped second-quarter growth, as did the lingering impact of rising inflation, HSBC said. The world economy will expand 4.3 percent this year, according to June forecasts from the International Monetary Fund. Developing nations will grow 6.6 percent and advanced economies 2.2 percent, the IMF estimates.

“Rates of production growth eased across the majority of manufacturing sectors monitored by the survey, with South Africa and Singapore the two exceptions,” HSBC said. “China saw growth slow to the least marked in nine quarters while output rose at the weakest rates for two quarters in Taiwan and South Korea. Even India recorded a slower rise in manufacturing output, although the rate of growth remained substantial.”

The lender noted a sharp reduction in inflationary pressures as central banks across the developing world raised interest rates, saying this increased the prospects of a “soft landing” for emerging-market economies.

To contact the reporter on this story: Mike Cohen in Cape Town at mcohen21@bloomberg.net.

To contact the editor responsible for this story: Andrew Barden at barden@bloomberg.net.