According to analysts World markets’ reaction to recent signs of a slowdown in emerging economies has highlighted the importance of these new engines of global growth to the financial system. Slowing emerging market growth is very consequential for global growth in general, UBS economist Bhanu Baweja noted.

Emerging markets

On Monday, some good news came from the OECD though, which said that tentative signs of economic betterment had looked in the euro zone even as business human activity showed signs of collection in China and Brazil. The Organization for Economic Cooperation and Development said the United States and Japan had the most improved growth prospects.

China, the second-biggest economy in the world, has cut its 2012 growth target to 7.5% from a previous estimate of 8.0%, as it swung into a trade deficit of $31.48 billion in February. Brazilian growth slumped to 2.7% last year from 7.5% in 2010, while India’s economy expanded by 6.1% in the last three months of 2011, the weakest pace in three years. They have been hit by several factors, including economic slumps in markets such as the United States and Europe, and the rising cost of energy. But even Russia, which relies on providing natural resources such as oil and gas for much of its economic growth, expects 3.7% growth this year, down from 4.3% in 2010.

Emerging economy

Moscow’s primary market, the 17-nation euro zone, has been held back by a chronic debt crisis and is now in a soft recession according to European Economic Affairs Commissioner Olli Rehn. Indicators from developed economies have presented a fairly gloomy picture, with consumer confidence falling in Japan and France, and a euro zone purchasing managers index slipping back in February. Other data is a little more promising however, such as that for German and Indian industrial output which rebounded in January, and news from the United States which also give reason for hope. The US economy created 227,000 new jobs in February, and US Federal Reserve chairman Ben Bernanke says growth this year will stay close to or slightly above the 2.25% pace of late 2011.