Unilever Chief Executive Officer Paul Polman blames the lack of structured economic reforms in the slowdown of emerging markets, and claimed that the slowdown could run for years. Polman also added that the reforms should be centered on how emerging markets adjust to new conditions after its recent boom.
Polman said, "They are still relatively stronger economies, but still fragile. And you see that growth coming off now a little bit, obviously not being helped either by lower demand coming from Europe and the U.S. This will last a few years. And it will only be corrected if some of the reforms have been made in these places."
The world's second-largest consumer-goods maker, Unilever said on September 30 that the growth decline in emerging markets would have an impact on its sales in the second half of this year. Most of the company's revenues came from economies in countries like India and China, Bloomberg said in its report. Unilever's underlying sales in the third quarter rose 3.2%, which the Anglo-Dutch maker of Lipton tea on October 24, was its weakest increase in the last four years and marked a slowdown of of 5% pace in the first-half.
Kepler Cheuvreux analyst Jon Cox in Zurich said, "Emerging markets are clearly decelerating, but will always grow faster than the developed world. Unilever is the emerging market play -- given 60 percent of sales are there, what Polman says on them has a lot of weight. "
"People were thinking interest rates in the U.S. would go up again and then money came back to the U.S.. You saw a lot of these emerging market currencies go down 10 to 15 percent. Fortunately these countries are stronger, so you don't have another Asian crisis," the Dutch executive said, referring to central banks' policies that spurred liquidity in emerging markets.
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