India maintains robust growth in July-Sept

Bucks trend of slowing manufacturing growth; outpaces other emerging economies

The rate of economic growth in emerging markets declined for a consecutive quarter in July-September, according to the latest HSBC Emerging Markets Index (EMI), primarily as manufacturing in most economies slowed. India, however, bucked the trend of decelerating manufacturing growth.

The HSBC EMI dropped to 54.3 in the quarter, against 56 in the quarter ended June. The index had reached a peak of 57.5 in the first quarter of 2010. A reading above 50 in the index indicates economic expansion. EMI had hit a trough at 43.3 in the fourth quarter (October-December) of 2008.

“The powerful export momentum seen earlier in the year is fading fast. Business expectations in services have fallen away quickly, so that they are now at their lowest since the depths of global financial crisis,” HSBC Chief Economist Stephen King said in a research note.

He added the third quarter figures suggested the pace of economic recovery had faded more quickly in the emerging world than either in the US or the euro zone. However, King dissipated apprehensions, saying the long-term prospects continued to be positive for the emerging economies.

“The longer-term story remains compelling and the chances are that productivity-driven growth in emerging nations will continue to outpace the rate of expansion in the developed world. Structurally, emerging nations are likely to remain in the driving seat of global growth,” King added.

Of the major emerging economies, India maintained a robust rate of expansion, outpacing other countries like Brazil, China and Russia. Brazil reported the lowest increase in manufacturing for five quarters. Russia saw growth drop sharply to a one-year low, while China’s expansion fell to its weakest in a year and a half.

India, on the other hand, reported a strong output rise in the quarter, with significant new business growth, and was one of the only two countries that registered an increase in new export orders.

EMI is a weighted composite indicator derived from the national Purchasing Managers’ Index. The survey covers 16 emerging economies.