Real gross domestic product increased at a 2.6 percent annual rate in the second quarter of this year, and last week the Commerce Department announced that output rose at only a 1.6 percent rate in the third quarter. These figures are down notably from the nearly 3-1/2 percent average pace of the preceding two years.
As you know, currencies and bonds of those countries experiencing relatively wide current account deficits, sluggish economic expansion and inflationary pressures underperformed assets of emerging markets who performed better on these metrics. Concerns about a deceleration in Chinese economic growth also affected financial assets in commodity-exporting countries, like South Africa, which had benefitted from China’s surging industrial demand in earlier years.