PGJ - Emerging Markets Show Resilience Despite Global Monetary Tightening

2024-07-13 05:20:00 ET

Summary

• Emerging market capital flows have remained largely resilient in the face of global monetary tightening, even as global capital flows have fallen.
• We know that rapid monetary tightening in the US and a strong dollar can lead to sudden capital flight and financial crises in the emerging world.
• Amid shrinking global flows, emerging markets must double down on recent improvements in macroeconomic frameworks, more effective policies and stronger institutions that have helped them to ride out the prospect of higher-for-longer US interest rates.

By Cian Allen, Economist, Open Economy Division, IMF Research Department | Rudolfs Bems, Deputy Division Chief, IMF Research Department ...

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