The research team at Danske Bank thinks they’ve laid their finger on the main reason why global economic growth slowed so much in 2012, and it’s not the lingering Eurozone sovereign debt crisis we’ve heard so much about.
Rather, most of the deceleration in the growth is from the BRIC economies.
From Danske Research’s Global Scenarios report:
After two years of a slowdown there are finally tentative signs of a recovery in emerging markets – not least in China. Stronger activity in this region will be important for the global economy as it drives around 75% of global growth. In fact, lower growth in BRIC countries is behind around 80% of the decline we have seen in global growth this year.
The team cites Chinese monetary tightening in 2011 as contributing factor to the lower growth for BRICs. However, the team projects a return to 6 per cent average growth for emerging and developing economies in 2013, which in turn will help lift global GDP growth up to about 4 per cent:
[credit provider=”Danske Research, IMF”]
Looking forward, the research team believes emerging markets will serve as a tailwind for growth and “underpin corporate earnings growth in the US and Europe where sales to these markets play an increasing role.”
Bullishness on the BRICs heading into 2013 is an increasingly popular investment theme for the new year.