Wednesday, February 19, 2014

Over time, optimism about Emerging Markets is probably correct

 Over time, optimism about emerging markets is probably correct. Many have sound macroeconomic, financial and policy fundamentals. Moreover, some of the medium-term fundamentals for most emerging markets, including the fragile ones, remain strong: urbanization, industrialization, catch-up growth from low?per capita income, a demographic dividend, the emergence of a more stable middle class, the rise of a consumer society and the opportunities for faster output gains once structural reforms are implemented. So it is not fair to lump all emerging markets into one basket; differentiation is needed.

But the short-run policy trade-offs that many of these countries face - damned if they tighten monetary and fiscal policy fast enough, and damned if they do not - remain ugly. The external risks and internal macroeconomic and structural vulnerabilities that they face will continue to cloud their immediate outlook. The next year or two will be a bumpy ride for many emerging markets, before more stable and market-oriented governments implement sounder policies.- in Project-Syndicate

Nouriel Roubini is an American professor of Economics at New York University`s Stern School of Business and chairman of RGE Roubini Global Economics
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