Emerging market growth slowed to its weakest level in two years during the second quarter of 2011 owing to global economic fragility and the lingering impact of inflation, according to HSBC's Emerging Markets Index (EMI), released Thursday.
The EMI dipped to 54.2, down from 55.0 in the first quarter, HSBC said.
"HSBC's latest EMI confirms that, after a strong rebound in the immediate aftermath of the global financial crisis, the pace of activity in the emerging markets has faded," said Stephen King, HSBC's Chief Economist.
The moderation in overall activity growth reflected a weaker increase in manufacturing production, while service providers recorded a slightly faster rise in business activity, the bank said.
The report noted that price pressures eased sharply against a backdrop of continued monetary tightening by central banks in response to inflationary pressures.
King tempered the news by indicating that emerging nations remain "magnets for global capital." They are also increasingly investing in each other, with the prospect of more and more Asian-funded infrastructure projects in Latin America and parts of Africa, he added.
The quarterly EMI track business conditions in over 5,800 reporting companies from emerging markets including Mexio, Singapore, South Africa, South Korea and the BRIC economies of Brazil, Russia, India and China.
Vietnam is not included in the index.