The Resilience of Emerging Markets

Emerging markets have shown impressive resilience in the face of global economic challenges, managing to emerge from the pandemic with healthier balance sheets than expected. Initially, the predictions suggested a wave of defaults in these markets; however, only a handful occurred, highlighting the ability of policymakers and corporations to effectively navigate crises. This resilience is attributed to proactive measures taken by many emerging markets to stabilize their economies, such as raising interest rates early to create monetary policy buffers. Nonetheless, fiscal risks remain a concern, as excessive government spending could undermine the stability achieved during tougher times.