Countering the Contagious West
In the world of old, the West’s economic malaise already would have pulled the rug from beneath most emerging-market countries. Today, however, these countries have considerable policy flexibility and greater latitude to act than they had in the past.
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NEWPORT BEACH – Imagine for a moment that you are the chief policymaker in a successful emerging-market country. You are watching with legitimate concern (and a mixture of astonishment and anger) as Europe’s crippling debt crisis spreads and America’s dysfunctional politics leave it unable to revive its moribund economy. Would you draw comfort from your country’s impressive internal resilience and offset the deflationary winds blowing from the West; or would you play it safe and increase your country’s precautionary reserves?