Macro Comment Emerging MarketsEM turmoil not the overture for a full-blown crisis

Some emerging markets (EM) have experienced very severe stock market losses and currency weakening this year, particularly since mid-April, and hardly any EMs have avoided the fallout from a stronger USD and tighter global liquidity. On various vulnerability indicators, several EMs (including Argentina and Turkey) indeed look fragile, and we have most likely not seen the worst yet. On the other hand, the current turmoil should not be the beginning of a widespread EM crisis, in our view, as EMs on aggregate are not much worse off now than before the two most recent EM asset sell-offs.

Bjarke Roed-Frederiksen

Senior Economist

Latin America and China

bjro03@handelsbanken.dk

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