EMs: No big dent on world economy

Export/GDP exposure of the US, euro area and Japan to the stressed EM economies is only around 2 per cent

EMERGING market (EM) currencies have had a wobbly start in 2014 (see Chart 1). Last week, the region also witnessed its largest equity outflows since Aug 11. The mounting financial instability and political risks in a number of EM countries and growing concerns about China's growth led to the sell-off in EM assets. The US Federal Reserve's decision to further taper its quantitative easing programme did not help. Where exactly are the stresses in EM? Will they go away or derail global economic growth?

Fragility of the Fragile Five

Investors are paying close attention to a group of EM countries (Brazil, India, Indonesia, Turkey and South Africa) - increasingly known as the "Fragile Five". These countries...

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