As per the HSBC business survey on emerging countries, services and manufacturing sectors across emerging economies expanded at slowest pace in January mainly due to sluggish services sector growth in the emerging economies such as Brazil, Russia, India and China (BRIC). The composite HSBC emerging markets index, based on the survey of around 8,000 firms in 17 countries, fell to four-month low at 51.4 in January from 51.6 in December. However, the index remained above the 50 mark, which separates growth from contraction.
The HSBS survey indicated that though services activity in the BRIC countries was at a six-month low, manufacturing activities also remained sluggish in these countries except India. Deteriorating external balances forced some countries like Turkey, Brazil, India and South Africa to prevent monetary easing, which impacted their business activities in the reported month. Meanwhile, the improvements in the developed markets including Mexico, Poland and Czech Republic have significantly added to the index of emerging economies.
Referring to inflation in emerging countries, the HSBC survey highlighted that inflationary pressures remained firm in the reported month, as weak currencies were raising costs for some manufacturers. The future output index, measuring firms' expectations for the next 12 months, picked up in January after falling in December to a six-month low. Further, manufacturing level touched a ten-month high while the service sector level fell to a record low in January.
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