Emerging market growth remains subdued in March: HSBC

Faster growth in China was countered by weaker expansions in Brazil, India and Russia, a survey by the bank says

Growth in emerging economies remained subdued in March as the faster growth in China was countered by weaker expansions in Brazil, India and Russia, an HSBC survey said today.

The HSBC Emerging Markets Index (EMI), a monthly indicator derived from the PMI surveys stood at 52.6 in March, little unchanged from the February reading when it stood at 52.4, indicating a subdued rate of economic growth in global emerging markets.

The HSBC composite manufacturing and services PMI for China increased in March to 53.7 from 51.4 the previous month, while for the other three large emerging market economies it witnessed a decline.

The HSBC composite manufacturing and services PMI for India decline to 51.4 in March from 54.8 in February, Brazil (to 51 from 52.9) and Russia (to 53.4 from 54.9). An index measure of above 50 indicates expansion.

"Manufacturing across emerging markets showed signs of stabilisation in March after cooling the previous month. In part, the lift reflects stronger activity in China, where the Lunar New Year holidays had dampened output previously," HSBC Co-Head of Asian Economic Research Frederic Neumann said.

Moreover, economies that are sensitive to changes in demand on the Mainland, including Korea, Taiwan, Indonesia and Vietnam, also showed gains in March.

In contrast, among the developed nation, financial uncertainties continue to weigh on growth in Europe; in the United States, the latest surge in business investment may be fading while demand will be impacted by fiscal cutbacks.     
"These challenges are already reflected in the details of the latest Emerging Markets Index. Despite the lift from China, growth of both new orders and employment remained moderate," Neumann said.     

He added, "None of this is to suggest that the emerging markets boom is about to run out of steam. But the latest Emerging Markets Index highlights, yet again, the growing importance of China amid the ongoing drag from more developed economies in the West".     

Meanwhile, business expectation for the next 12 months continue to be robust Chinese businesses, while outlooks for output moderated since February in the three remaining BRIC economies.     

The weakest degree of sentiment was in Russia, followed by Brazil. Outlook for India was the strongest overall among the four BRIC countries, but the pace has moderated since February.     

Business growth in emerging markets witnessed a moderation in March. New order growth picked up slightly in manufacturing, but eased further at service providers. Meanwhile, employment continued to rise, but at a weaker rate than the long-run survey average, HSBC said.