The turmoil in Russia and broader weakness in EM financial markets has brought a subdued end to the year. For 2014 as a whole, the latest data point to aggregate GDP growth of less than 5% for the third successive year. And it seems that the “new normal” of sub-5% growth will continue in 2015. Structural factors will remain a drag on growth in the BRIC nations next year, while recent sharp falls in commodity prices – particularly oil prices, which have almost halved since June – will also weigh on those EMs that export natural resources. Of course, lower oil prices, coupled with the recent sell-off of EM currencies against the dollar, will benefit many manufacturing-based EMs, particularly in Emerging Asia and Emerging Europe. But this is unlikely to be enough to drive a significant acceleration in overall EM GDP growth, which we expect to remain stuck at about 4.5% next year.
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