Emerging countries waver, advanced economies expand

PARIS –– Emerging giants China, Russia and Brazil are losing some of the driving steam which helped prevent a global economic slump, but advanced economies are now increasingly able to pick up the slack, according to key data published on Tuesday.

The Organisation for Economic Cooperation and Development (OECD) said its latest monthly report on leading economic indicators suggest that “the growth momentum is weakening in most major emerging economies” with the indicators showing weaker than usual growth in China, Russia and Brazil.

Conversely, the United States and Canada are showing stable growth momentum, the 18-member eurozone as a whole including Italy is improving and non-euro Britain is steadying at unusually strong growth rates, the OECD said.

The OECD’s report was published shortly after Britain and Italy both published strong industrial output for the month of April.

The British statistics office reported that industrial output expanded 0.4 per cent in April from the March level when it gained 0.1 per cent and over 12 months showed a jump of 3 per cent.

That was far ahead of analysts’ expectation of a 12-month rise of 2.8 per cent.

At Berenberg bank, chief UK economist Rob Wood commented: “Today brought yet more good news on the strength of the UK recovery, with manufacturing output rising solidly for the fifth consecutive month.

“The UK economy is increasingly firing on all cylinders, setting up the second quarter for another strong growth reading.”

Italy’s industrial production also rose more than expected in April in a welcome boost for the eurozone’s third-biggest economy.

Industrial production was up 0.7 per cent compared with output in March — the first increase for three months.

The Italian data “suggest that the economy might return to growth in Q2”, said Capital Economics analyst James Howat.

However, the analyst was less upbeat about Tuesday’s French data, which showed industrial output rallied in April by 0.3 per cent, saying it suggested “that the recovery there remains pretty weak”.

The OECD said however, that for Germany and France, the signs were that these two economies were growing steadily.

The signals for Japan pointed to an upset in its momentum towards growth, but this could reflect one-off factors, the OECD said.

The OECD said that its leading indicators of trends suggested “that the growth momentum is weakening in most major emerging economies”.

But India looks as though it is picking up speed, the OECD said.

Russia shrinks, Poland, Turkey grow 

These indicators, which are closely watched by analysts and investors as reliable pointers to future activity, “point to growth below trend in Brazil, China and Russia”.

Russia is on the brink of recession, with the government forecasting up to $100 billion in capital outflows, as investors jittery about the crisis in Ukraine pull out their funds.

But for India the indicators “tentatively indicates a positive turning point” which could suggest “a return to faster growth”, said the OECD.

In Poland, the biggest economy in former Communist central Europe, the government approved a budget for next year on Tuesday, forecasting growth of 3.8 per cent.

Poland, a member of the European Union but considered by economists to be part of emerging Europe, has escaped recession, growing continuously since 1992. 

Separate data from emerging and non-EU Turkey showed that the Turkish economy grew at an annual rate of 4.3 per cent in the first quarter of 2014 despite political turmoil and a sharp rise in interest rates.

The OECD is a policy research centre and advice forum for 34 advanced democracies, and also monitors big emerging markets and notably those in the so-called BRICS group comprising Brazil, Russia, India, China and South Africa.