Emerging markets experienced a further dip in economic momentum in May 2025, as fresh data from S&P Global Market Intelligence’s Purchasing Managers’ Index (PMI) revealed a renewed manufacturing slowdown. The GDP-weighted emerging market PMI output index fell to 50.9 in May from 51.9 in April—its weakest pace of growth since the expansion began in January 2023.
According to Jingyi Pan, Economics Associate Director at S&P Global, the downturn was primarily driven by declining manufacturing activity amid elevated global uncertainty and new US tariffs. Goods-producing sectors, in particular, bore the brunt, with factory output, new orders, and employment levels all seeing negative trends. The report noted that manufacturing headcounts shrank faster than in April, as rising spare capacity discouraged firms from hiring.
Divergence between sectors and economies
While the service sector offered some resilience in emerging markets, the manufacturing downturn signalled deeper vulnerabilities. Notably, May marked the first time in eight months that developed markets outpaced emerging markets in terms of output expansion. This shift highlights the fragility of growth trajectories in countries more exposed to global trade dynamics.
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Among BRIC economies, only India and Russia posted output expansions. India continued to lead, though its growth rate moderated slightly to a three-month low. Still, India’s manufacturing sector remained a bright spot globally, with strong demand, operational improvements, and a record surge in employment. Meanwhile, Russia replaced China as a growth contributor, as China reported its first decline in output in over two years. Brazil’s output also fell, marking its fastest rate of contraction in four months.
Easing price pressures a silver lining
There was some relief on the inflation front. Input cost and output price inflation rates both declined in May, primarily due to cooling manufacturing cost pressures. Average selling prices for goods dropped for the second time this year, easing concerns around price stability for emerging market consumers.
The data suggests that while India remains a growth standout, most emerging markets are struggling to sustain manufacturing momentum amid global economic headwinds.