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 in a telephone interview on Wednesday. “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 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 advanced 0.06 percent to 1,016.86 at 8:55am in London yesterday.
Emerging-market economic activity has not 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 its slowest pace in almost three years in the first quarter, a report today would probably show, setting the stage for monetary loosening and aid to exporters, HSBC said.
GDP 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 this year, helped by stimulus measures such as a 100 basis point cut in reserve--ratio requirements, tax breaks and other budgetary steps predicted by HSBC, Ulgen said.
The global economy will expand 3.3 percent this year and 3.9 percent next year, according to January forecasts from the IMF. Developing nations will grow 5.4 percent this year, while advanced economies will expand 1.2 percent, the IMF estimates.