Anyone who bet that India, Brazil and China would slow down in an exact order was a winner. Actually, it is hard to say where the drop-off began and when. China certainly joined the group as its official PMI dropped to  50.4, which shows the sector is barely growing. A related survey from HSBC posted 48.4. China’s number tracks its largest companies. The HSBC figure is weighted toward smaller ones.

The PMI figures for the People’s Republic signal that GDP growth could drop below 8%, which is something that almost no one expected a year ago.

Just yesterday, India announced its GDP expansion fell to a near-decade low of 5.3%. Brazil’s central bank dropped its rate to 8.5% from 9%.

At least Brazil and China have plans to stimulate their economies through government investment and bank policy. That gives each nation an advantages, shared to some extent by the U.S., to help the sputtering private sector. The region that has caused most of the global slowdown — Europe — is not so lucky.

That divide of countries that can help themselves financially and those that cannot has become more profound. But, stimulus in the countries that can help themselves may not help much.  They rely on the wounded EU region, which is not only badly crippled, but it is crippled in a way that policy will not help — because there is none — at least for the time being.

The situation in Europe has become bad enough that EU and ECB officials have joined the heads of many countries to lobby Angela Merkel to support aid and a system to bail out banks. She almost certainly will continue to resist. ECB President Mario Draghi said, “We will avoid bank runs from solvent banks. Depositors’ money will be protected if we build this European guaranteed deposit fund. This will assure that depositors will be protected.” Merkel stonewalled.

Europe’s GDP as a region is the largest in the world — nearly $16 trillion by most estimates. India, Brazil and China may have internal problems of regulation and slowing consumer spending that are not based directly on trade. But most of their economic problems are and will be.

It may be obvious now, but the economic figures from the big three emerging economies will get much worse.

Douglas A. McIntyre

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