Tougher times for policymakers
- • In the June edition of Emerging Markets Briefer we made the argument that in todays world of slowing global growth, rising inflation and an ongoing credit crisis, it is extremely important that economic policies be credible. We still believe this theme is extremely important, and market developments in the past month clearly underline this fact.
- • With the global economic and financial environment worsening, policymakers will be tested to a much greater degree than generally has been the case over the past decade - or at least the past 6-7 years. This will particularly be the case in Emerging Markets.
Inflation has yet to peak
Weak institutions increase risk of policy mistakes!
- • Examples of countries where central banks are doing the right things are Hungary, Poland, Brazil, Mexico and Indonesia.
- • Examples of countries where monetary policies are more doubtful are Ukraine, Kazakhstan, India, Philippines, South Africa and most certainly Argentina.
- • Market performance will be very much related to the course of monetary policies in the time ahead. We expect markets where central banks act prudently to outperform.
In Asia Indonesia is rewarded for doing the right thing
