So much so that, over the past four years, Asia led by China and, to a lesser extent Latin America, have become the engines of global growth.
But those hoping that the emerging markets will continue to act as a panacea to the western world’s ills might be headed for disappointment.
While authorities in Europe and the US fight to stave off a double-dip recession and deflation, emerging markets’ policymakers are battling the opposite problems – overheating economies and runaway inflation.
Over the past 18 months, a number of countries, including China, India and Turkey, have adopted a range of measures including interest rate increases, a tightening of bank reserve requirements and price controls to stem the tide.
While these appear to be taking effect, with input-cost inflation in emerging markets at its tamest in two-and-a-half years according to HSBC, this achievement has come at a cost.
Recent purchasing managers’ index data, compiled by the...
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