Economic growth in emerging market economies slowed in the July-September quarter on poor performance by the manufacturing sector, but India expanded more than China, an HSBC survey said.
The HSBC Emerging Markets Index (EMI) slipped to 52.1 in the third quarter (Jul - Sept) this year, from 53.2 in the April-June period.
A relatively better performance from the services sector was offset by the poor performance of the manufacturing sector, as global demand softened.
However, among the big-four emerging markets, expansion in India and Russia were better than Brazil and China, HSBC said.
Although the HSBC EMI, which is based on PMI (Purchasing Managers' Index) surveys conducted across the emerging markets, stayed above the 50-mark that differentiates growth from slowdown, HSBC noted that the global economic condition is posing strong headwinds for them.
"Emerging economies are being impacted by the misery of the developed world as the deteriorating global trade cycle, weaker external demand and falling new export orders hit manufacturing output and the services outlook," HSBC's chief economist for Central and Eastern Europe and sub-Saharan Africa Murat Ulgen said.
New export orders for emerging markets manufacturers fell for the third successive quarter (of the calendar year 2012) across the world's emerging markets, representing the strongest decline since the first quarter of 2009.
"Emerging Asia is facing a set of tough challenges, the slump in global manufacturing, accentuated by a sharp inventory correction, will restrain industrial activity at least until the beginning of 2013," HSBC Co-Head of Asian Economic Research Frederic Neumann said.
Going forward, although manufacturing was mainly responsible for third quarter weakness, the longer-term outlook for the services economy deteriorated to its lowest level since the survey began in 2005.
Though the level of gloom about the future business outlook moderated among the big-four emerging market economies, Indian counterparts were the most confident, the HSBC survey said.
Neumann further noted that the monetary stimulus from the West will gradually help ease local financial conditions further, even without any additional rate cuts and the "region should slowly regain its growth momentum through the course of 2013".