Is another 1997-style emerging market crisis on the cards?

Is the global economy under threat once more? Leon Perera, CEO of Spire Research and Consulting shared his insights in The Business Times – Views from the Top section on 10 September 2018 on the risks facing the world economy.

Some economists have pointed to signs of an imminent economic crisis similar to the emerging markets currency crisis of the late 1990s or the Lehman shock of 2008.

Perera highlighted that the US continues to register strong growth in stock prices, jobs and Gross Domestic Product (GDP) with further Fed interest rate hikes likely. However, emerging market growth is slowing down and some countries have run into trouble, like Turkey.

In this context, the biggest risk to the world economy may be the potentially destabilizing effect of a strong US dollar and US economy on emerging markets.

This confluence of factors raises the risk of capital outflows from emerging markets, credit woes as well as currency depreciation and volatility.

Geopolitical disturbances could also wreak economic chaos. The process of denuclearization on the Korean peninsula, uncertainties surrounding the Iran nuclear deal as well as Turkey’s financial crisis all have the potential to cause economic shocks.

Readhere more:https://www.spireresearch.com/newsroom/media/is-another-1997-style-emerging-market-crisis-on-the-cards/

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