Emerging economies India and China showing signs of economic cooling: Expert

September 13th, 2008 - 6:23 pm ICT by ANI  

Washington, Sept 13 (ANI): Developing countries including China and India, are showing signs of economic cooling as the effects of the downturn that started in the United States continue to spread around the globe, says an expert.
“Basically, what you”ve got is the emerging world now slowing at the same time as the developed world. Though the magnitude of their slowdown is a lot more modest, it is a negative for the global economy. The question now, obviously, is how much will they slow down, the Washington Post quoted Michael Hartnett, chief emerging markets strategist for Merrill Lynch, as saying.
These fears that booming emerging markets are becoming caught up in a global slowdown have helped send the dollar soaring this week.
But according to Hartnett, the developing world has remained relatively resilient against global turbulence — particularly given the pummeling many countries took during the Asian and Latin American financial crises of the 1990s and the early 2000s.
He, however, says that while they are still growing at rates that would be the envy of developed nations, the signs of a shift in fortunes are sprouting up from Shanghai to New Delhi to Sao Paulo.
According to the paper, in India, the high-tech and outsourcing sectors are softening as they absorb cutbacks from U.S. corporate clients.
In China, diminished export expansion is cooling the economy from a growth rate of 12 percent last year to an estimated 9 to 10 percent this year, while the stock market in Shanghai has fallen more than 60 percent since its peak in October. In Brazil, exports slipped last month after surging for months.
For the United States, there are pros and cons to the developing world’’s decelerating growth.
On one hand, it is already contributing to falling commodity prices, driven up for years by the insatiable demand in emerging markets. On the other hand, emerging-market cooling is adding to the overall drop in global growth, which is set to slide at least to 4.1 percent this year from 5 percent in 2007, according to the International Monetary Fund.
That is likely to spell trouble for U.S. exports, which propped up the economy in the last quarter. (ANI)

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