What problems do the Emerging Markets face? – genxfxtrader

What problems do the Emerging Markets face? – genxfxtrader

The emerging markets are the countries with a rapid growth in economic activity, ie both internal growth and increased trade relations with other countries. Within emerging markets we must make a distinction has based on their income and infrastructure development market .

On the one hand, Emerging Markets Advanced are: Brazil, Russia, India, China, South Africa (which form the ” BRICS “), Mexico, Taiwan, Czech Republic, Poland and Hungary.

On the other hand, the Emerging Secondary Markets : Argentina, Turkey, Indonesia, Peru, Chile, Pakistan, Morocco, Egypt, Colombia, Thailand, Malaysia, the Philippines and Romania.

What triggered the “turbulence” in international markets has been the interaction of different events:

The ” Achilles heel ” of the whole thing is  China , because growth prospects and contraction of the PBOC in financing the interbank market. To all this we must add the “shadow banking”, ie, the shadow banking as a possible “default” investment products or what is the same the fall of a major financial institution in the style of Lehman Brothers.

The political uncertainty and social unrest that exists in countries like Turkey and Ukraine.

You are “turbulence” quickly moved to the more advanced economies, but the conclusion to be drawn from all this is that problems in emerging markets are not an invention, but a reality.

“Countries fragile ” are those who in the past two years have experienced lower growth than expected , a strong dependence on foreign capital and high inflation which in some cases has reached 10%. Nor can we forget the political turmoil as it can be a very important element that can determine whether or not a given country recovers.

These five countries held elections in 2014 and have current account deficits, facts that may cause the measures needed to tackle the crisis is not implemented.

Countries receiving the nickname of ” five fragile ” are Brazil, India, Turkey, South Africa and Indonesia .

Nor can we forget us from other countries, although not as important, have weaknesses and are vulnerable to the ” vagaries ” of markets, such as Argentina, Ukraine and Venezuela . These countries have external imbalances and electoral or political risks.

Countries ” BRICS ” are a group of larger emerging countries and global impact: Brazil, Russia, India, China and South Africa.

These countries grew dramatically in recent years, but now the reality is quite different, and they are suffering a slowdown in growth .

The world’s second largest economy, China , presents the risk of credit – driven investment and excessive indebtedness of local administrations. In addition, the “shadow banking”, ie, the shadow banking and the possible “default” investment products (the fall of a major financial institution Lehman Brothers style).

In the event that China’s growth was weaker than expected (not reach the intended target of 7.5%), cause a “slowdown” in trade and financial flows worldwide. Without going any further, Brazil’s current account deficit and high exposure to China.

The Central Bank of South Africa and India have raised interest rates to contain the caídad of their currencies and stem the rise in prices.

Legal notice

To my mind we are in a “tense calm” the markets are taking a breather, and see what can happen in the coming months.

I doubt you have already done.

Indeed, we are in a relatively quiet, but that
does not mean you have passed the “storm” .

I would say that emerging markets are in Stage 2 and are preparing for the next stage of uncertainty, fear, “fear” and a new generalized fall in international markets.

We see what happens.


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