Emerging markets - slowdown not beginning of end of catch-up process

First of all, it is important to bear in mind that temporary factors play a key role in explaining the most recent slowdown in growth. Aside from the fact that key buyer countries have been grappling with stalling economies in recent years, exporting countries have also been hit by corrections in various commodity prices, for example agricultural commodities and industrial metals. The prices of many commodities have stabilized in recent months and are now headed in at least a slightly positive direction. This, coupled with the end of the economic slump in the world's industrialized countries, is likely to support a revival in growth. What is more, many emerging market currencies have depreciated against the currencies of major industrialized countries over the past few months, which is also likely to work in their favor. However, the outlook for capital inflows over the coming months is uncertain. The likely break with the low interest rate policy in the US will serve as a stress test for those emerging markets that rely heavily on the inflow of capital from abroad due to their external deficit.