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S&P Global — 18 June 2024

Daily Update: June 18, 2024

Emerging Markets Boom on India, China Growth

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By Neil Denslow

Start every business day with our analyses of the most pressing developments affecting markets today, alongside a curated selection of our latest and most important insights on the global economy

The economies of emerging markets posted the fastest economic growth in 12 months in May, fueled by expansion in India and China, according to S&P Global Purchasing Managers’ Index (PMI) survey data.

The GDP-weighted Emerging Market PMI Output Index in May rose month over month to 54.4 from 53.6, marking the 17th month of expansion. The increase, coupled with improvements in developed markets, boosted global economic growth to an annualized rate of 3.4%, according to S&P Global Market Intelligence.

India had the highest rate of expansion among the four major emerging market economies, even though its pace dipped to a five-month low. Mainland China had its fastest growth since May 2023 as improvements in domestic and overseas demand spurred the biggest jump in manufacturing output in nearly two years. Brazil’s and Russia’s growth slowed down for the month.

Across emerging markets, new orders surpassed developed markets and rose at the fastest pace since May 2023, supporting a pickup in global trade. Overall sentiment also slightly improved among emerging market companies, according to the Future Output Index.

These readings indicate “that growth is likely to sustain in the coming months across emerging economies,” Jingyi Pan, economics associate director of S&P Global Market Intelligence, said.

A concern in the PMI survey is continuing cost pressures in emerging markets, even if inflation is lower than in developed markets. Average selling prices are going up, and rising costs, especially in manufacturing, could spill into other markets, Pan said.

“This is an area worth monitoring,” Pan said, adding that emerging market price pressures have the potential to contribute to higher worldwide inflation.

Emerging markets fueled a second straight monthly increase in global trade, extending a rebound following about two years of unbroken declines. The seasonally adjusted Global PMI New Export Orders Index, which gauges the divide between growth and decline, remained unchanged from April at 50.6. Trade conditions also improved in both the manufacturing and services sectors for the second month in a row.

Emerging markets led growth in global exports with one of the highest readings for business expansion in three years. Manufacturing and services posted higher exports. By contrast, developed markets declined in overall export orders.

Better demand conditions and efforts by goods producers to rebuild inventories bolstered global trade, Pan wrote in another S&P Global Market Intelligence summary, citing anecdotal evidence. The increased demand has so far failed to cause supply chain stress, based on the Global PMI Suppliers' Delivery Times Index, Pan said.

India led global manufacturing new export orders in May, with the country posting its highest reading in more than 13 years. Survey respondents cited greater inflows of new work from Africa, Asia, the Americas, Europe and the Middle East. Export order growth also accelerated in South Korea, while it cooled in mainland China.

The overall rosy picture for emerging market exports supported a May bond rally. Yields declined for all 10 of the biggest nations by market weight in an iBoxx US dollar emerging markets index, according to S&P Dow Jones Indices’ monthly market commentary. China, the biggest index component, had the largest drop in yields at 40 basis points. Chile, Indonesia and Mexico were among other nations with declines surpassing 20 basis points.

Today is Tuesday, June 18, 2024, and here is today’s essential intelligence. The next edition of the Daily Update will be published Thursday, June 20.

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—Read the article from S&P Global Commodity Insights

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—Read the article from S&P Global Commodity Insights

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—Read the article from S&P Global Commodity Insights

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—Read the article from S&P Global Ratings

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—Register for the webinar from S&P Dow Jones Indices