EM industry in the doldrums

Industrial production growth in the emerging world remains very weak, with our aggregate measure of EM industrial output expanding by just 2.2% y/y in the three months to July – the slowest pace since September 2009. The worst performing region is Latin America, where output has been falling in y/y terms for over a year. The weakness in Russia has weighed heavily on Emerging Europe, where output is also now contracting. In contrast, industrial production growth is holding up relatively well in Emerging Asia. Looking ahead, we expect some improvement in parts of the EM world, particularly those with strong trade ties to the US, where the economy should continue to recover. In contrast, growth is likely to remain weak in those EMs that are dependent on natural resources.