EM commodity slowdown: cyclical or structural?

The slump in growth in EM commodity producers partly reflects a deterioration in potential growth rates in these economies but is mainly the result of cyclical weakness caused by a collapse in their terms of trade. This means that, while growth in these EMs is not going back to the highs seen over the past decade, it should eventually recover as commodity prices stabilise. In the near term, though, the big surprise could be that, once the effects of recent currency weakness wash through, inflation pressures in EM commodity producers fall more quickly that many currently expect.