Tailspin or Turbulence?
For emerging economies, this year began with a wave of financial turmoil, like that which followed the US Federal Reserve’s announcement last spring that it would “taper” its asset-buying program. But their real vulnerability is rooted in private-sector balance sheets, particularly given heavy foreign borrowing in some countries.
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WASHINGTON, DC – Since the beginning of the year, a new wave of doubt has engulfed emerging markets, driving down their asset prices. The initial wave struck in the spring of 2013, following the Federal Reserve’s announcement that it would begin “tapering” its monthly purchases of long-term assets, better known as quantitative easing (QE). Now that the taper has arrived, the emerging-market bears are ascendant once again.