AVEM - Dispelling Myths About Emerging Market Debt Growth
By Justin Leverenz and Tan Nguyen
Executive Summary
There is a widely held perception that emerging market ((EM)) debt growth was spread broadly across markets. The truth is that the growth in the past decade has been focused almost entirely in China.
EM economies have low levels of fragility today, thanks to healthy current accounts, low external borrowings, and reasonable fiscal balances.
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We remain sanguine about China's capacity to manage their leverage for many reasons:
China's debt is supported by the country's high saving rates.
There is low to no reliance on external borrowings.
The