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Tag Archives: emerging markets

Climate finance: an agenda for EU coordination with emerging markets

Addressing the challenge of financing the low-carbon transition will require substantial investment in the European Union and in emerging and developing economies. Sustainable finance frameworks have proliferated in advanced and emerging markets but fragmentation of financial flows due to different classification systems and standards for green financial instruments is a real risk. Ensuring consistency should be a core agenda for the new International Platform on Sustainable Finance....

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Emerging market central banks and quantitative easing: high-risk advice

Central banks in emerging markets with weak currencies should not resort to unorthodox monetary tools such as quantitative easing as a response to the crisis triggered by COVID-19. Preferable alternatives include shifting public spending away from less pressing needs, moderately increasing public debt and falling back on official development assistance. The idea that ‘credible’ emerging-market central banks (EMCBs) could embrace quantitative easing (QE) to tackle the consequences of the...

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COVID-19’s shock for emerging economies

COVID-19 is by far the biggest challenge policymakers in emerging economies have had to deal with in recent history. The pandemic is hurting emerging economies in at least three ways: by locking down their populations, damaging their export earnings and deterring foreign capital. Even if the pandemic will fade in the second half of the year, gdp in developing countries, measured at purchasing-power parity, will be 6.6% smaller in 2020 than the IMF had forecast in October. In this episode we...

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COVID-19’s reality shock for external-funding dependent emerging economies

COVID-19 is by far the biggest challenge policymakers in emerging economies have had to deal with in recent history. Beyond the potentially large negative impact on these countries’ fiscal accounts, and the related solvency issues, worsening conditions for these countries’ external funding are a major challenge. COVID-19 has brought to light a reality that had been mostly forgotten in an era of ample dollar liquidity: the excessive dependence of emerging economies on external financing. The...

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The impact of Covid-19 on emerging markets with Barry Eichengreen

Without a robust healthcare system and lack of medical equipment, emerging market economies are vulnerable to the current COVID-19 pandemic. How can developed countries help tackle the issue? Is international cooperation more needed than ever? This week, Giuseppe Porcaro and Guntram Wolff are joined by Barry Eichengreen to discuss the impact of COVID-19 on emerging markets. Republishing and referencing Bruegel considers itself a public good and takes no institutional standpoint. Anyone is...

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Brazil: playing with fire

Rattled by political turmoil and in the midst of severe stagflation, Brazil is really ‘playing with fire’. Urgent measures are needed to reduce the fiscal deficit along with key structural reforms to reduce the size of the government. Summary Brazil is no longer a star performer in the emerging world, in which the economy is slowing down and falling into an abyss. Rising inflation and weak GDP growth have placed Brazil in a dilemma regarding monetary policy, while the large fiscal deficit...

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Global Corporate Bond Market Looking Junkier

For years, financial markets have been fretting about “looming” Federal Reserve interest rate hikes that keep getting pushed further into the future. One of investors’ greatest fears is what could happen to corporate bonds, which experienced a boom linked to aggressive stimulus measures from world central banks, when the Fed began to tighten monetary policy for the first time in nearly a decade. But something funny happened in recent months: Corporate bond markets retreated despite...

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The dragon sneezes, Europe catches a cold

Should we be worried about the turmoil in China’s stock market, and the spill-overs to markets in other countries? Two competing hypotheses currently exist: The first is that Chinese stocks had grown at unsustainable rates leading up to the crash, and this is simply a market correction back towards fundamentals, and not a warning of deeper weakness in the Chinese economy. This view would align with that of the ECB’s vice-president Vitor Constâncio: “Indications are that … the...

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