HSBC
HSBC survey shows global emerging market outlook has moderated in MarchReuters/Peter Nicholls

Emerging market growth continued to slow in the third month of the year dragged by much weaker Brazilian and Russian performance, which may have halved the first quarter GDP growth of the group from the pre-crisis levels, according to an HSBC report.

The HSBC emerging market index for March dropped to a two-month low of 51.6 in March, from 51.9 in February, a Markit press release on Wednesday showed. The average over the first quarter stood at 51.6, broadly in line with the Q4 last year average of 51.5.

"The survey data suggest the emerging markets collectively saw economic growth remain in the doldrums in the first quarter. GDP looks set to have risen at an annual rate of around 5%, half the pace of expansion seen prior to the global financial crisis," said Chris Williamson, Markit's chief economist.

The investment bank said the Brazilian output saw the sharpest fall since April 2009 and input price inflation has quickened to a seven-month high for emerging markets at the end of Q1.

HSBC said the slowdown reflected a weaker rise in manufacturing output, where the rate of growth was at a 10-month low. Services activity increased at the fastest rate in 2015 so far, albeit only a modest overall pace, according the report.

Hit the BRICS

The result of the four largest emerging economies came in mixed, with India showing the strongest output, HSBC said.

"China registered a modest pace of growth that was unchanged from February's five-month high. India posted a further robust increase in output, while Brazil saw the sharpest drop since April 2009. Russia posted a sixth successive decline in private sector activity, but the weakest rate of contraction since December," the report said.

HSBC said input prices rose at the fastest pace in seven months, despite a further fall in Chinese manufacturing input prices. With regard to expectations, the outlook for global emerging markets moderated in March, the investment bank said.

"India has taken over as leader of the quartet, followed by China, although rates of expansion remain disappointingly subdued in both cases. However, even these historically-modest rates of growth are welcome contrasts to the downturns currently being signalled in Brazil and Russia," said Williamson.

HSBC said its surveys indicate that India's growth rate is likely to have picked up from the 7.5% pace seen late last year, while China's growth rate looks set to weaken further from the 7.3% annual pace seen at the end of last year.

The deterioration in business conditions in Brazil was the most worrying as it adds to fears that the country is sliding back into recession. Despite a moderation in the rate of decline in Russia the situation remains severe, the investment bank said.