When larger economies were on the downswing, it looked for a while that the emerging markets were, by virtue of their growth, going to come out of the global recession unscathed.
An article by Moisés Naím at The Atlantic, however, talks about how emerging markets are crashing.
The Atlantic defines emerging markets as "the group of low- and middle-income countries that have experienced a long period of rapid growth and poverty alleviation," such as Argentina or Brazil.
Another article in The Atlantic explains: "Emerging market currencies have been in a world of pain since last May. That's when Ben Bernanke first hinted that the Fed would soon draw down — or 'taper' — its bond purchases. So investors pulled their money out just as quickly as they had moved it in — and emerging market currencies fell."
What made the emerging markets so vulnerable to this?
“Emerging markets, especially in Latin America, are much better at managing economic crises than prosperity,” Luis Alberto Moreno, the president of the Inter-American Development Bank, told The Atlantic. “As the good situation starts to recede, the structural weaknesses that were always there and were masked by the growth resurface, become again apparent and impactful.”
Will the problems of these emerging markets have an impact on stronger economies?
"Stock markets in the U.S., Europe, and Japan just recorded their worst earnings since January 2010 — a telltale sign that the crisis in emerging markets has already hurt developed countries," Naím says. "But the consensus among experts is that, for now, it is unlikely that this crisis will escalate into a full-blown global crash."Comment on this story
An article by Ansuya Harjani at CNBC Asia reviewed what several experts are predicting. She quoted a report by William Stone at PNC Wealth Management who wrote, "We expect that woes in emerging markets may continue to provide occasional worries for global markets similar to what was experienced during periods of the euro zone crisis in 2011 and 2012. Our expectation is that emerging markets will also fail to drag the global economy into crisis."
Mitul Kotecha at Credit Agricole told CNBC, however, "There's certainly potential for contagion." Meaning, the problems in emerging markets could affect global markets similar to the way problems in the euro zone did in 2011 and 2012.