Publication

The major risks for emerging market economies in 2011 will come not from the policies and actions of the countries themselves, but from developments in advanced economies. There are three major risks: the debt crisis in Europe and the ramifications of potential sovereign defaults, continued sluggish growth in the US, and China’s role in the so-called “currency wars”. Many developing countries have recently become notably resilient to adverse external shocks; with good macroeconomic policies and some good luck, they may be able to weather the storm, but the US, Europe, and China have large roles to play in their success or failure to do so.