A Bumpy Ride for Emerging Markets

In recent months, the environment for capital flows to emerging economies has deteriorated sharply. But that does not mean that we are witnessing the collapse of yet another economic bubble, as many analysts are claiming.

BERKELEY – Emerging markets have been the darlings of global investors for most of the last decade. Even staid pension funds and sovereign wealth funds have increased their allocations to emerging-market assets.

Recently, however, the environment for capital flows to emerging economies has deteriorated sharply. Slowing growth and policy missteps, together with signs that the US Federal Reserve will start tightening monetary policy by scaling back its “quantitative easing” (QE, or open-ended purchases of long-term assets), have triggered deep sell-offs in emerging economies’ currency, bond, and equity markets.

What went wrong? Are we witnessing the collapse of yet another economic bubble, as many analysts are claiming?

To continue reading, please log in or enter your email address.

To access our archive, please log in or register now and read two articles from our archive every month for free. For unlimited access to our archive, as well as to the unrivaled analysis of PS On Point, subscribe now.

required

By proceeding, you agree to our Terms of Service and Privacy Policy, which describes the personal data we collect and how we use it.

Log in

http://prosyn.org/ptmJjjQ;

Cookies and Privacy

We use cookies to improve your experience on our website. To find out more, read our updated cookie policy and privacy policy.