Global economy sees stable growth in June, but divergence seen between developed and emerging markets

The latest PMI data showed the global economy witnessed further stable growth in June. The JPMorgan PMI dropped to 53.7 in June from May’s 53.8; however, still completed a strong second quarter. At 53.7 the average of the second quarter was unchanged on that seen in the first quarter, which had in turn been the best performance for two years. Therefore, the surveys have been hinting that global economy likely grew around 2.5 percent over the first half of 2017.

But the surveys also indicated the divergence between the developed and emerging markets widening, amidst slower growth in emerging markets. The developed world PMI hinted the second-fastest rate of growth in just over one and a half years. On the contrary, the emerging markets PMI dropped to its lowest level since last November. The underperformance of the emerging market PMI compared to the developed world was the most marked since January 2016.

Developed world growth was widespread but was led again by the euro area. Even if the euro area PMI hinted slightly softer growth in June, the region outperformed its peers for the fifth consecutive month with the survey hinting second quarter growth at a six-year high, noted Markit. Growth rates also dropped in the U.K and Japan, but in both cases rounded off better quarters than the initial three months of the year. On the contrary, U.S. growth accelerated a bit in June, though the second quarter average remained below the first quarter.

Meanwhile, out of the four largest emerging markets, only India saw business activity grow at an increased rate in June. Growth in Russia and China decelerated, though the former recorded the most rapid growth of the BRIC economies. In the meantime, Brazil dropped back into decline after two months of marginal growth.

Of the four largest emerging markets, only India saw business activity grow at an increased rate in June. Growth slowed in both China and Russia, though the latter recorded the fastest growth of the BRIC economies. Brazil meanwhile slipped back into decline after two months of marginal expansion.

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