Emerging Market Exports May Not Benefit From DM Recovery

The Fed’s decision not to begin tapering just yet has reverberated throughout the global economy, but emerging markets are particularly affected because tightening monetary policy in the US pulls capital out of EM economies. So far we’ve only heard from two EM central banks, India and South Africa, and both acknowledge that they have only received a temporary reprieve. EM countries’ best bet is to grow exports, but Citi Head of EM Economics David Lubin isn’t optimistic that they’ll pull it off.

Emerging market exports causing deficit

“The prospect of US monetary tightening is, as always, a factor that pulls capital away from emerging market,” writes Lubin. “The countries that suffer most from this process are those that...