The material on this site is for financial institutions, professional investors and their professional advisers. It is for information only. Please read our Terms & Conditions, Privacy Policy and Cookies before using this site. Please see our Subscription Terms and Conditions.


All material subject to strictly enforced copyright laws. © 2021 Euromoney, a part of the Euromoney Institutional Investor PLC.
Foreign Exchange

Emerging markets out of bullets

Analysts at Royal Bank of Canada recently summed up the prospects for many of the non-G7 economies in a piece of research entitled Running out of bullets.

"Over the past six months the global credit crisis has been most intense in G7 markets centred around the shocking deterioration of the US banking system. During this time emerging market (EM) policymakers spent considerable resources doing their best to buffer their economies, banking systems and financial markets from these pressures. With financial resources for many EMs dwindling to uncomfortably low levels, ie, running out of bullets, and global pressures set to remain intense, we expect this crisis to rotate into EMs in coming weeks/months resulting in a second, more EM-centric sell-off – which may already be under way," it stated.

There’s a vicious circle building as these countries not only border one another but they are trading partners. The fear is that a recession in one leads to a recession in another. It looks a lot like Asia in the late 1990s

Other banks agreed that the outlook was bleak for numerous emerging markets. "Taking CDS spreads as a guide, several central and eastern European countries seem to be on the verge of collapse," wrote BNP Paribas in its FX Daily Strategist.

You have reached premium content. Please log in to continue reading.

Read beyond the headlines with Euromoney

For over 50 years, our readers have looked to Euromoney to stay informed about the issues that matter in the international banking and financial markets. Find out more about our different levels of access below.

SUBSCRIBE ONLINE TODAY

Unlimited access to Euromoney.com and Asiamoney.com

Expert comment, long reads and in-depth analysis interviews with senior finance professionals

Access the results of our market-leading annual surveys across core financial services

Access the results of our annual awards, including the world-renowned Awards for Excellence

Your print copy of Euromoney magazine delivered monthly

£73.75 per month

Billed Annually

FREE 7 DAY TRIAL

Unlimited access to Euromoney.com and Asiamoney.com, including our top stories, long reads, expert analysis, and the results of our annual surveys and awards

Sign up to any of our newsletters, curated by our editors

LOGIN NOW

Already a user?

We use cookies to provide a personalized site experience.
By continuing to use & browse the site you agree to our Privacy Policy.
I agree