Three threats to emerging economies in 2022 4

Three threats to emerging economies in 2022 4

The US tightening monetary policy, China's economic slowdown and the Omicron variant are three big risks for emerging markets next year.

The appearance of the Omicron variant sparked a wave of sell-off in financial markets last week.

If we’re lucky, officials can take control of Omicron.

First, let’s consider US monetary policy.

To assess which places face the greatest pressure from the Fed’s tightening policy, The Economist collected macro data on 40 emerging economies.

A score of 40 is the highest damage, corresponding to the red color.

Combining these parameters of countries will create a `vulnerability index`.

Türkiye’s fundamentals look a bit better, but their risks are compounded by the government’s insistence on lowering interest rates as prices soar.

The second dangerous factor comes from China’s slowing economy.

The Economist also ranked 40 emerging economies as above, according to the criteria of how much their GDP depends on trade with China, to create an index of the country’s economic vulnerability (

Many large exporting countries to China, such as Vietnam, are important links in the global supply chain.

Meanwhile, countries that export products for consumption in China are at greater risk.

Combining two measures of vulnerability due to US policy tightening and China’s slowing growth, we will see which emerging economies are at risk from fluctuations in either of these two superpowers.

For example, despite high debt levels and soaring inflation, high commodity prices have helped Brazil maintain investor confidence.

The world has faced similar pressures.

The combined pressure this time will almost certainly be worse.

The third danger for emerging markets next year is the spread of Omicron and the risk of further variants appearing in the future.

Only one-tenth of the African population has received one shot, less than the proportion of Americans who have received their third shot.

The spread of a new variant for which current vaccines are not as effective would pose risks to economies dependent on tourism.

The combination of the three risks mentioned above will make the economies of poor countries struggle even more.

Omicron’s localized lockdowns in China could deal another blow to emerging market exporters.

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