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Emerging Markets outlook

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The evil double whammy

Mon, Dec 3 2007, 14:43 GMT
by Danske Research EmergingMarkets Team

Danske Bank A/S


Another month with high volatility

  • November brought renewed turmoil to the global financial markets and the impact was also felt on the Emerging Markets. Initially the traditional high-beta markets Turkey and Brazil came under pressure.
  • It seems like the markets have calmed down a bit now on renewed hope that the Federal Reserve will come to the rescue once again with rate cuts.

How will EM weather external shocks?


  • Going forward it is obvious that the global credit crunch will also hit the Emerging Markets, most predominantly in the liquidity-hungry economies.
  • Secondly, in the last year inflation has risen significantly in most Emerging Markets mainly through the supply side of the economies via higher energy and food prices. This will hit consumers’ purchasing power in Emerging Markets and limit growth in domestic demand.

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