Long road ahead
Liquidity drought’s conflicted Cassandras
Tuesday, September 4, 2012
Meanwhile, growth markets, especially in South America and
southeast Asia, have dealt with hydra-shaped risks:
growth/inflation trade-offs or, during prolonged market
rallies, the challenges of destabilizing capital inflows and
excessive currency appreciation.
This year, the global monetary easing cycle has intensified,
with inflation no longer the overriding concern among emerging
market policymakers. The monetary policy calculus has shifted in
the wake of the eurozone debt crisis and a domestic slowdown in
the investment and consumption cycles in all the key emerging
As a result, monetary-policy timing
as well as decisions and the quality of tools available
have proved crucial to shaping the economic cycle. Fiscal
policy, meanwhile, has played a more varied role, given the
divergent debt metrics across emerging markets.
By contrast, developed markets have scarcely benefited from
the luxury of proactive policymaking while they attempt to
firefight the growth crisis with few tools left in the policy
At the same time, fears are growing that the US Federal Reserve and the European Central Bank have compromised
their independence and are sowing the seeds of a new credit
bubble, while the negative sovereign-bank feedback loop
Against this backdrop, working in conjunction with Euromoney Country Risk, which has more than
400 economists around the world contributing on sovereign risk
on a regular basis, Euromoney profiles some of the most
effective policymakers across the world relative to the
challenges in their respective markets.
This list incorporate the views of senior bankers and
economists, taking into account subjective assessments of
political and economic performance, in addition to our
propriety sovereign risk data.
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