>The new world: Emerging markets after the crisis

■ Emerging markets have fared quite well in the crisis
• Particularly against the background of large financial market losses in Sep/08-Mar/09

■ EM economic growth lower than in the “boom“ years but still very robust
• Roughly 4 pp per year higher than in industrial countries in the next 3-5 years

■ Some short-term risks to watch
• Risks of bubbles building in some markets; inflation on the rise in some countries
• Policy risks as governments try to manage “excessive“ capital inflows

■ Medium-term trend: EM position improves but specific risks remain
• Large build-up of public debt in DM has brought issue of sovereign risk to the fore
• Relative risk position of EMs has significantly improved
• Importance of EMs as consumer markets and regarding commodities will rise further
• EM political and policy risks remain important: country-specific knowledge essential

To read the full report: NEW WORLD