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Slowdown in Emerging Markets: Rough Patch or Prolonged Weakness?

Listed author(s):
  • Tatiana Didier

    ()

    (World Bank, Operations and Strategy Group)

  • M. Ayhan Kose

    ()

    (World Bank, Development Prospects Group; Brookings Institution; CEPR; CAMA)

  • Franziska Ohnsorge

    ()

    (World Bank, Development Prospects Group)

  • Lei Sandy Ye

    ()

    (World Bank, Development Prospects Group)

Emerging markets (EM) face their fifth consecutive year of slowing growth and a possibly longer period of sluggish performance than previously thought. This paper presents a comprehensive analysis of the nature of and the appropriate policy responses to the growth slowdown in EM. It reports three main results. First, the slowdown is synchronous and protracted, affecting a sizable number of EM, especially large ones. Second, it has been driven by both external factors, including weak world trade, low commodity prices, and tightening financial conditions; and domestic factors, including slowdown in productivity growth, bouts of policy uncertainty, and an erosion of policy buffers. Both structural and cyclical factors have contributed to the slowdown. Third, the room for accommodative cyclical fiscal and monetary policies is limited in many EM, lending urgency to putting in place structural reforms to upgrade governance structures, improve business environments, raise human and physical capital, and manage demographic pressures.

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File URL: http://eaf.ku.edu.tr/sites/eaf.ku.edu.tr/files/erf_wp_1529.pdf
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Paper provided by Koc University-TUSIAD Economic Research Forum in its series Koç University-TUSIAD Economic Research Forum Working Papers with number 1529.

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Length: 66 pages
Date of creation: Dec 2015
Handle: RePEc:koc:wpaper:1529
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  1. Rodrik, Dani, 1991. "Policy uncertainty and private investment in developing countries," Journal of Development Economics, Elsevier, vol. 36(2), pages 229-242, October.
  2. Rud, Juan Pablo, 2012. "Electricity provision and industrial development: Evidence from India," Journal of Development Economics, Elsevier, vol. 97(2), pages 352-367.
  3. Tom Krebs & Martin Scheffel, 2013. "Macroeconomic Evaluation of Labor Market Reform in Germany," IMF Economic Review, Palgrave Macmillan;International Monetary Fund, vol. 61(4), pages 664-701, December.
  4. Yunus Aksoy & Henrique S. Basso & Tobias Grasl & Ron P. Smith, 2015. "Demographic Structure and Macroeconomic Trends," Birkbeck Working Papers in Economics and Finance 1501, Birkbeck, Department of Economics, Mathematics & Statistics.
  5. Agenor, Pierre-Richard & Nabli, Mustapha K. & Yousef, Tarik & Jensen, Henning Tarp, 2007. "Labor market reforms, growth, and unemployment in labor-exporting countries in the Middle East and North Africa," Journal of Policy Modeling, Elsevier, vol. 29(2), pages 277-309.
  6. Lane, Philip R, 2003. "Business Cycles and Macroeconomic Policy in Emerging Market Economies," International Finance, Wiley Blackwell, vol. 6(1), pages 89-108, Spring.
  7. Gupta, Sanjeev & Kangur, Alvar & Papageorgiou, Chris & Wane, Abdoul, 2014. "Efficiency-Adjusted Public Capital and Growth," World Development, Elsevier, vol. 57(C), pages 164-178.
  8. World Bank, "undated". "World Bank East Asia and Pacific Economic Update, April 2015," World Bank Other Operational Studies 21737, The World Bank.
  9. Andrea Bassanini & Danielle Venn, 2008. "The Impact of Labour Market Policies on Productivity in OECD Countries," International Productivity Monitor, Centre for the Study of Living Standards, vol. 17, pages 3-15, Fall.
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  12. Tom Krebs & Martin Scheffel, 2013. "Macroeconomic Evaluation of Labor Market Reform in Germany," IMF Economic Review, Palgrave Macmillan;International Monetary Fund, vol. 61(4), pages 664-701, December.
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