The combined growth of manufacturing and service sectors of the major BRIC (Brazil, Russia, India and China) economies registered expansion in the fourth quarter of 2012, but is still well below the pre-crisis level.
The HSBC Emerging Markets Index (EMI) rose to 52.9 in the fourth quarter of 2012, from 52.2 in the July-September period, representing the first upward movement since the first quarter of 2012 (January-March).
The mild rebound in growth was mainly led by an expansion from the manufacturing sector as although the service sector witnessed an improvement over the previous quarter, its outlook remains below-par, HSBC said.
"Although hardly buoyant economic growth, recent improvements are encouraging, especially as complemented by encouraging signs for the early months of 2013," HSBC Chief Economist Stephen King said.
The HSBC EMI, which is based on PMI (Purchasing Managers' Index) surveys conducted across the emerging markets, is above the 50-mark that differentiates growth from slowdown.
Among four largest emerging economies, Brazil posted a return to growth following the previous quarter's
stagnation, while Russia overtook India to post the best rate of output growth, HSBC said, adding that "China saw its growth improve, but remain relatively weak, while India posted a solid rate of expansion".
While China has yet to resume the pace of growth it once enjoyed, this enhanced gravitational pull is driving a 'Great Rotation' of economic activity from the deleveraging old world to the dynamic new world, King said.
New export orders for emerging markets manufacturers fell for a fourth consecutive quarter, reflecting weak demand from advanced economies, notably those in the euro-zone. However, total new orders in emerging economies increased in the final quarter of 2012.
"Much of the growth is domestic as export orders are still contracting, although not at the worrying pace seen mid-year," King added.
Looking ahead, the 12-month outlook for service providers across the BRIC economies improved slightly on the previous quarter.
Optimism was led by Brazil's service providers, followed by India. Meanwhile, Russian and Chinese service providers remained relatively subdued in their expectations for the coming year.
"The Emerging Markets Index may not be particularly strong at the moment but China is set to have a bigger influence than either the US or Europe on the economic destiny of emerging markets," HSBC added.