EM vulnerabilities are mainly home-grown

A rise in US Treasury yields and tightening of external financial conditions could cause vulnerabilities in Turkey and a handful of smaller frontier markets to crystallise. However, most major EMs’ dependence on capital inflows looks limited. Instead, in the largest EMs, the biggest risks are domestic in nature. These include public debt problems in South Africa and Brazil, as well as banking sector risks in India and China.
Shilan Shah Senior India Economist
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