Can EMs escape the worst of a global slowdown?

ON EMERGING MARKETS

Emerging markets are unlikely to remain immune from a global slowdown due to its trade and capital linkages with the rest of the world.

Since Asia continues to enjoy significant funding from European banks, the region remains susceptible to any future liquidity events or shocks which might trigger wholesale balance sheet shrinkage by these banks. Even before the most recent bout of turbulence hit global equity markets, there were signs emerging markets would deliver a more muted performance through 2011. Earnings across the asset class have peaked earlier in the year. However, one positive consequence flowing from the lower growth environment is the expectation that inflation has also reached peak levels across emergi...