The global upswing is now regaining some traction and the threat of renewed financial crisis has diminished. However, the world recovery will stay weak and vulnerable to other risks such as deflation and protectionism. Emerging Asia’s expansion will moderate too. But the combination of vibrant domestic demand, improving trade links across emerging markets, as well as local policy flexibility, means that hard-landings remain unlikely. Policy rates look set to rise by the end of November in Korea, Taiwan, India, Pakistan, Thailand, Malaysia, the Philippines and Australia. The rally in currencies should continue and a boom in stocks looks on the way in coming quarters.
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