Growth Surprises and Synchronized Slowdowns in Emerging Markets–

Growth Surprises and Synchronized Slowdowns in Emerging Markets––An Empirical Investigation

September 17, 2014

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Ghada Fayad, and Roberto Perrelli. Growth Surprises and Synchronized Slowdowns in Emerging Markets––An Empirical Investigation, (USA: International Monetary Fund, 2014) accessed November 21, 2024

Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary

Output growth has slowed in several emerging markets since 2011—a remarkable feature for a non-crisis period in EMs. Such synchronized slowdowns were largely unanticipated by scholars and forecasters alike. In this paper we attempt to shed light on the main drivers of growth surprises and synchronized slowdowns in emerging markets post-global financial crisis. We find that lower trading partner demand was a key external factor in explaining these events during 2011–13, and that changes in external financing conditions have yet to play a role in EMs’ growth. On the domestic front, the withdrawal of the fiscal stimulus put in place right after the Lehman collapse is a relevant aspect in these episodes, compounding the effect of the weaker external demand. Idiosyncratic factors, such as structural bottlenecks with the potential to impair growth in a more lasting fashion, also seem to partly explain these events, as reflected in the larger residuals found in regression-based estimates for certain countries.

Subject: Emerging and frontier financial markets, Exchange rate arrangements, Financial crises, Financial markets, Foreign exchange, Global financial crisis of 2008-2009, Output gap, Production

Keywords: Debt profile, EM Europe, EM recovery, Emerging and frontier financial markets, Emerging market, Emerging market economy, Exchange rate arrangements, Financial crisis, Fiscal policy, Global, Global financial crisis of 2008-2009, Growth deceleration, Growth slowdown, Growth surprise, Growth surprises, Output gap, Trading partners, Trading partners’ demand, WP

Publication Details

Pages:

24
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 2014/173
Stock No:

WPIEA2014173
ISBN:

9781498335836
ISSN:

1018-5941

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