EME central banks can counter the next downturn

Key financial valuations in the emerging market economies (EMEs) continue to react strongly to the ups and downs in sentiment in global financial markets. At the moment, markets seem to be discriminating between those EMEs with “good” fundamentals and those with “bad” fundamentals.

Yet even a modest global downturn as monetary policy normalises in the US and as growth in China and Europe falls, could bring to light vulnerabilities in several financial systems in the emerging markets. The next