Developed economies are turning into global growth engines as some of their emerging-market counterparts decelerate amid “acute” market pressures, the International Monetary Fund (IMF) has said.
“Global growth remains subdued but its underlying dynamics are changing,” the IMF said in a report for leaders of the Group of 20 nations meeting this week in St. Petersburg, Russia.
“Momentum is projected to come mainly from advanced economies, where output is expected to accelerate.”
Bloomberg News reported on Sunday, that emerging markets, which helped pull the world out of a recession after the global financial crisis, now face an exodus of cash and sliding currencies in anticipation of the Federal Reserve’s eventual tapering of its $85bn in monthly bond purchases.
Expansion in those countries is 2.5% points below 2010 levels, with Brazil, China and India accounting for the slowdown, according to the IMF.
BRICS Economies Plan $100b Reserves Fund
In a another development, leaders of the BRICS group of nations — Brazil, Russia, India, China and South Africa — have said they will set up a $100 billion (£65 billion) fund to guard against financial shocks.
According to a British Broadcasting Corporation report, the move comes as emerging economies across the world have been hit by speculation that United States may scale back its key economic stimulus programme soon.
That has seen investors pull out money, hurting currencies of emerging nations.
The BRICS leaders said the details of the fund were still being worked out.