econintersect.com
       
  

FREE NEWSLETTER: Econintersect sends a nightly newsletter highlighting news events of the day, and providing a summary of new articles posted on the website. Econintersect will not sell or pass your email address to others per our privacy policy. You can cancel this subscription at any time by selecting the unsubscribing link in the footer of each email.



posted on 02 July 2016

Are Emerging Economies Becoming More Resilient?

from the St Louis Fed

-- this post authored by Ana Maria Santacreu

In a recent study, the International Monetary Fund (IMF) reported that the decline in growth prospects has caused a slowdown in net capital flows in 45 emerging markets since 2010.[1] This slowdown has been driven by both a decrease in inflows and an increase in outflows. According to the study, the decrease accounted for 4.9 percent of the sample's gross domestic product (GDP). Both the decrease in inflows and the increase in outflows occurred across all asset types (that is, debt portfolio, as well as foreign direct investment and other investment).

However, there have been regional differences in the slowdown, with eastern Europe experiencing a more pronounced slowdown in net capital outflows and Latin America suffering less, driven in part by higher flexibility in its exchange rate.

Compared with past episodes where net capital flows slowed down to the point of causing financial and debt crises (the 1980s and 1990s), the study finds that emerging markets are more resilient now. In a 2015 article, I documented the factors that make emerging markets more vulnerable to capital outflows.[2] Consistent with that study, the IMF's report finds that, among other reasons, emerging markets are now less vulnerable due to:

  • A higher integration in global financial markets

  • A larger amount of foreign exchange reserves that they can deploy in case of currency attacks

  • Higher flexibility in their exchange rates

  • An improvement in their macroprudential policies

The improvement of emerging markets in these areas is particularly important to avoid large depreciations in their currencies and, thus, current account crises that they have previously experienced. It also makes them more resilient to changes in policy announcements by the governments and central banks of more advanced economies. This was a big area of concern during 2008-09, when governments in advanced economies applied expansionary policies as a consequence of the financial crisis that started after the collapse of Lehman Brothers.

The stronger the economic fundamentals of emerging markets are, the more resilient they become to changes in policy announcements and to changes in the prospects for growth.

Notes and References

1 "Too Slow for Too Long," International Monetary Fund World Economic Outlook, April 2016.

2 Santacreu, Ana Maria. "The Economic Fundamentals of Emerging Market Volatility," Federal Reserve Bank of St. Louis Economic Synopses, 2015, No. 2, Jan. 30, 2015.

Additional Resources

Source

https://www.stlouisfed.org/on-the-economy/2016/june/are-emerging-economies-becoming-more-resilient

Disclaimer

Views expressed are not necessarily those of the Federal Reserve Bank of St. Louis or of the Federal Reserve System.

>>>>> Scroll down to view and make comments <<<<<<

Click here for Historical News Post Listing










Make a Comment

Econintersect wants your comments, data and opinion on the articles posted.  As the internet is a "war zone" of trolls, hackers and spammers - Econintersect must balance its defences against ease of commenting.  We have joined with Livefyre to manage our comment streams.

To comment, using Livefyre just click the "Sign In" button at the top-left corner of the comment box below. You can create a commenting account using your favorite social network such as Twitter, Facebook, Google+, LinkedIn or Open ID - or open a Livefyre account using your email address.



You can also comment using Facebook directly using he comment block below.





Econintersect Contributors


search_box

Print this page or create a PDF file of this page
Print Friendly and PDF


The growing use of ad blocking software is creating a shortfall in covering our fixed expenses. Please consider a donation to Econintersect to allow continuing output of quality and balanced financial and economic news and analysis.


Take a look at what is going on inside of Econintersect.com
Main Home
Analysis Blog
Consumers Carry Weak GDP Number Out of the Red
The Theory of the Monetary Circuit: A Critique
News Blog
Infographic Of The Day: Global Energy Efficiency
Early Headlines: Asia Stocks Lower, Oil Soft, Japan Deflation Strengthens, Trade Backlash, Trump Fades, Veto Override Reconsidered, DB Could Take Down Merkel And Euro, Germany's "Adolfina" And More
What Are British People Most Proud Of
Trust In Mass Media Erodes
Shimon Peres Was An Israeli Nationalist First And A Peacemaker Second
Guessing Game: Valuations Of Trump's Fortune
What We Read Today 29 September 2016
This Mushroom Starts Killing You Before You Even Realize It
August 2016 Median Household Income Has Declined From The Beginning Of The Year
August 2016 Pending Home Sales Index Declines?
24 September 2016 Initial Unemployment Claims: Rolling Averages Continue to Improve.
Third Estimate 2Q2016 GDP Revised Upward. Corporate Profits Down.
The Terrorist Networks At Our Fingertips
Investing Blog
Are You A Trader Or Investor?
Investing.com Technical Summary 29 September 2016
Opinion Blog
First: 'Over-Population End-of Times' Now: 'Shrinking Population Disaster'
The Federal Reserve Note
Precious Metals Blog
Where Silver Prices Are Headed Now After Fed's Latest Inaction
Live Markets
29Sep2016 Market Close: Wall Street Bracing For Major Turn Down If German Bank Fails, Crude Prices Rise Towards 50 Handle And US Dollar Showing New Strength
Amazon Books & More






.... and keep up with economic news using our dynamic economic newspapers with the largest international coverage on the internet
Asia / Pacific
Europe
Middle East / Africa
Americas
USA Government



Crowdfunding ....






























 navigate econintersect.com

Blogs

Analysis Blog
News Blog
Investing Blog
Opinion Blog
Precious Metals Blog
Markets Blog
Video of the Day
Weather

Newspapers

Asia / Pacific
Europe
Middle East / Africa
Americas
USA Government
     

RSS Feeds / Social Media

Combined Econintersect Feed
Google+
Facebook
Twitter
Digg

Free Newsletter

Marketplace - Books & More

Economic Forecast

Content Contribution

Contact

About

  Top Economics Site

Investing.com Contributor TalkMarkets Contributor Finance Blogs Free PageRank Checker Active Search Results Google+

This Web Page by Steven Hansen ---- Copyright 2010 - 2016 Econintersect LLC - all rights reserved