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Collection of full-length papers and in-depth analysis of economic and management issues.

Assessment of Emerging Countries'      Economic Recovery Capability

Assessment of Emerging Countries' Economic Recovery Capability

JUNG Ho-Sung

June 5, 2009

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Originally released on April 29, 2009

The global financial crisis has subjected emerging economies to lingering financial unrest and sluggish exports, ending a period of rapid growth which began in 2000. Recently however, emerging economies have begun to show positive signs in their leading economic indicators, even as recessionary sentiment still prevails in highly industrialized economies.

Signs of Economic Recovery in Emerging Countries

As financial markets in emerging economies centering on BRICs ( Brazil , Russia , India and China ) return to stabilization, stock indexes have climbed upward. From this year's market opening up to April 22, China 's Shanghai Composite Index and Brazil 's Bovespa Index have climbed 31% and 11.5% respectively. Inflow in funds into emerging markets recorded a total of US$7 billion. On the other hand, advanced economies experienced a US$60 billion net outflow of funds for the same period. Economic recovery sentiment which began in the investment sector is also spreading into the consumption sector. In fact, China 's Purchasing Manager Index (PMI) has been extending its gain for four months. In March 2009, the PMI recorded an 8.3% year-on-year increase, higher than the 5.4% recorded in November last year. Of course, the world economy will not be able to make a full-scale recovery without a recovery in the highly industrialized economies first, as they are the major export markets of emerging economies. Curre ntly, however, emerging economies are trying to make up for the steep fall in exports due to recession in highly industrialized countries while promoting trade and investment between emerging countries and boosting domestic demand. This raises the potential for some "cycle decoupling" of emerging economies from advanced economies in terms of the timing of the recovery.

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