Ye, Lei SandyDidier, TatianaKose, M. AyhanOhnsorge, Franziska2016-01-052016-01-052015-12https://hdl.handle.net/10986/23566A synchronous growth slowdown has been underway in emerging markets (EM) since 2010. Growth in these countries is now markedly slower than, not just the pre‐crisis average, but also the long‐term average. As a group, EM growth eased from 7.6 percent in 2010 to 4.5 percent in 2014, and is projected to slow further to below 4 percent in 2015. This moderation has affected all regions (except South Asia) and is the most severe in Latin America and the Caribbean. The deceleration is highly synchronous across countries, especially among large EM. By 2015, China, Russia, and South Africa had all experienced three consecutive years of slower growth. The EM‐AE growth differential has narrowed to two percentage points in 2015, well below the 2003‐08 average of 4.8 percentage points and near the long‐term average differential of 1990‐2008. The recent slowdown in EM has been a source of a lively debate, as evident from the quotations at the beginning of this note. Some economists paint a bleak picture for the future of EM and argue that the impressive growth performance of EM prior to the crisis was driven by temporary commodity booms and rapid debt accumulation, and will not be sustained. Others emphasize that a wide range of cyclical and structural factors are driving the slowdown: weakening macroeconomic fundamentals after the crisis; prospective tightening in financial conditions; resurfacing of deep‐rooted governance problems in EM; and difficulty adjusting to disruptive technological changes. Still others highlight differences across EM and claim that some of them are in a better position to weather the slowdown and will likely register strong growth in the future. This policy research note seeks to help move the debate forward by examining the main features, drivers, and implications of the recent EM slowdown and provides a comprehensive analysis of available policy options to counteract it.en-USCC BY 3.0 IGOGROWTH RATESMONETARY POLICYCAPITAL MARKETSCAPITAL GOODSDURABLE GOODSECONOMIC GROWTHTECHNOLOGICAL PROGRESSURBANIZATIONMULTIPLIERSTERMS‐OF‐TRADEINTERNATIONAL CAPITALEXPOSURESOIL PRICESFISCAL DEFICITSINTERESTINCOMEEXPECTATIONSECONOMIC CONSEQUENCESINTEREST RATEEMERGING ECONOMIESPROPERTY RIGHTSEXCHANGEBALANCE OF PAYMENTSMACROECONOMIC POLICYRESOURCE ALLOCATIONLABOR FORCEPOLITICAL ECONOMYINTERNATIONAL CAPITAL MARKETSDEVELOPING ECONOMIESREVENUESTECHNOLOGICAL CHANGESFISCAL POLICYWORLD DEVELOPMENT INDICATORSECONOMIC EFFECTSLABOR INPUTSINCENTIVESEQUILIBRIUMECONOMIC CONSEQUENCESMODELSCAPITAL MARKETSSUSTAINABLE DEVELOPMENTCENTRAL BANKSENERGY TAXESBUSINESS CYCLESDEVELOPED COUNTRIESECONOMIC EFFECTSEMERGING MARKET ECONOMIESECONOMIC ACTIVITYFISCAL POLICIESOIL PRICESGLOBAL ECONOMYOILCURRENCYEXPORT GROWTHTERMS OF TRADEADVANCED ECONOMIESPOPULATION GROWTHIRREVERSIBILITYDEBTSNATURAL RESOURCESOPTIONSLABOR PRODUCTIVITYINTEREST RATESSTRUCTURAL UNEMPLOYMENTOPECEMERGING MARKETDEBTSCIENTIFIC KNOWLEDGEGOVERNANCE INDICATORSTAX REFORMPRIVATE CAPITAL FLOWSLABOR PRODUCTIVITYDIVIDENDSTERMS OF TRADEPRIVATE CAPITALNATURAL RESOURCESPRODUCTION PROCESSESMETALSFINANCIAL SYSTEMSUBSIDIESEFFICIENCYPURCHASING POWERMARKET ECONOMIESTAXESCAPITAL CONSTRAINTSGOVERNMENT SECURITIESRESOURCESINFRASTRUCTURE INVESTMENTUNEMPLOYMENTEMERGING MARKETSDEREGULATIONENERGY CONSUMPTIONEQUITYINVESTORSPRODUCTIVITY GROWTHDATA AVAILABILITYCONSUMPTIONSCIENTIFIC KNOWLEDGEWAGESINTERNATIONAL TRADEVOLATILITYVALUESFINANCIAL CRISISFUTUREFISCAL POLICIESECONOMIC  GROWTHSHARE OF WORLD OUTPUTDISCOUNT RATESCREDITWORLD ECONOMYPURCHASING POWERDEMANDNATIONAL INCOMEMARKET ECONOMIESAGGREGATE DEMANDDISINFLATIONPOPULATION GROWTHENVIRONMENTSEXPENDITURESCAPITAL FLOWSPROPERTYADVANCED ECONOMYGLOBAL RISKSLABOR MARKETSENVIRONMENTLABOR FORCERESOURCE ALLOCATIONDEVELOPED COUNTRIESMONETARY POLICIESEXPANSIONARY FISCAL POLICYECONOMICSINFLATION‐TARGETINGTERMS OF TRADESECURITIESOUTPUTGLOBAL FINANCIAL MARKETCAPITAL GOODSGOVERNANCESTOCK INDEXESDISCOUNT RATESBUSINESS CYCLESCURRENCIESGOVERNMENT DEBTECONOMIC DEVELOPMENTTRADELANDMARKET VOLATILITYFINANCIAL MARKETINVESTMENTBONDSHAREINVESTMENT CLIMATEGLOBAL OUTPUTBALANCE SHEETSCOALBUSINESS ENVIRONMENTECONOMIC DEVELOPMENTSUSTAINABLE DEVELOPMENTBANKINGGLOBAL INVESTORSPRIVATE CONSUMPTIONWORLD TRADEPRODUCTIVITY GROWTHECONOMISTSENERGY TAXESTAX REFORMECONOMIC  GROWTHDEMOGRAPHICENVIRONMENTALLABOR MARKETSCOMMODITY PRICESPOWER OUTAGESCOMMODITYSTRUCTURAL UNEMPLOYMENTADVERSE EFFECTSECONOMIC GROWTHPROPERTY RIGHTSLABOR INPUTSGLOBAL ECONOMIC PROSPECTSPRICESCAPITAL CONSTRAINTSECONOMIC CONDITIONSINTERNATIONAL BEST PRACTICEECONOMIESPRODUCTION PROCESSESWorking PaperWorld Bank10.1596/23566