Between 2000 and 2010, aggregate growth in emerging markets averaged 6% on an annual basis. That compared to around 4% in the preceding two decades. The future looks less rosy. Estimates from the IMF2 point to a significant moderation in potential growth in large emerging markets. The factors behind the slowdown are varied.
But a common theme is that several countries are reaching the limits to their current growth models. China has become overly reliant on credit and investment; in India structural reforms slowed; Russia and Brazil have failed to diversify growth models and domestic investment has languished. The answers to such problems are structural reforms and ambitious efforts which became now necessary.