Emerging-Market Growth Accelerates on Industry, HSBC Says

Emerging-market economies probably grew at the fastest pace in nine months in the first quarter as manufacturing rebounded from a slump and services expanded, according to HSBC Plc, which cited a purchasing-managers survey.

The HSBC Emerging Markets Index, which is compiled by London-based Markit Economics and tracks conditions at more than 5,000 reporting companies, advanced to 53.4 from 52.4 in the previous three months, the first increase in three quarters.

“There’s been a gentle improvement and a slight acceleration in economic activity,” Murat Ulgen, HSBC’s London- based chief economist for central and eastern Europe and sub- Saharan Africa, said yesterday in a phone interview. “Despite all the problems in the West -- subdued growth and unemployment -- emerging nations are generally immune and holding up well.”

Emerging markets will continue to benefit from productivity gains and better access to capital, HSBC said. Governments there also have more room than their developed-world counterparts for fiscal stimulus while central banks are shifting focus to supporting growth from curbing inflation as price increases ease, except in India, it said.

Emerging-market stocks were little changed as concerns over a North Korean rocket launch overshadowed speculation that China and India may loosen monetary policy to bolster their economies. The MSCI Emerging Markets Index (MXEF) advanced 0.06 percent to 1,016.86 as of 8:55 a.m. London time.

Brazil, India

Emerging-market economic activity hasn’t returned to its levels before the global financial crisis that started in 2008, when HSBC’s index averaged about 57, Ulgen said.

Economic expansion was driven by the fastest services growth in four years in Brazil and in three years in India, HSBC said. The pair also led China and Russia in manufacturing growth. Chinese industrial output fell for a third quarter. Russian manufacturing dropped to near a nine-month low.

China’s economy expanded at the slowest pace in almost three years in the first quarter, a report tomorrow probably will show, setting the stage for monetary loosening and aid to exporters. Gross domestic product rose 8.4 percent from a year earlier following an 8.9 percent increase in the fourth quarter, according to the median estimate of 41 economists surveyed by Bloomberg News.

The Chinese economy, the world’s second-largest, will grow about 8 percent in 2012, helped by stimulus measures such as a 100-basis-point cut in reserve-ratio requirements, tax breaks and other budgetary steps predicted by HSBC, said Ulgen.

The global economy will expand 3.3 percent this year and 3.9 percent in 2013, according to January forecasts from the International Monetary Fund. Developing nations will grow 5.4 percent in 2012, while advanced economies will expand 1.2 percent, the IMF estimates.

To contact the reporters on this story: Agnes Lovasz in London at alovasz@bloomberg.net

To contact the editor responsible for this story: Balazs Penz at bpenz@bloomberg.net

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