Enthusiasm for emerging markets has been evaporating this year, and not just because of the US Federal Reserve's planned cuts in its large-scale asset purchases. Emerging-market stocks and bonds are down for the year and their economic growth is slowing. To see why, it is useful to understand how we got here.
Between 2003 and 2011, GDP in current prices grew by a cumulative 35% in the US, and by comparable rates in the UK, Japan and Germany. In the same period, nominal GDP soared by more than 300% in Brazil, China and Russia, and about 200% in India. All these measured in US dollars.
It was not just these so-called BRIC countries that boomed. Kazakhstan's output expanded by more than 500%, while Indonesia, Nigeria, Rwanda, Ukraine, Colombia, Romania and Vietnam grew by more than 200% each. This means that average sales in various sectors grew at comparable rates in these countries.
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