The economic impact of Fed tapering on EMs

Yesterday’s FOMC meeting cemented expectations that the Fed will start to taper its asset purchases under QE3 later this year and has weighed on EM financial markets today, but the economic impact of Fed tapering on EMs is likely to be limited. A handful of countries with large external financing requirements are vulnerable, but most EMs have cut their dependence on overseas borrowing over the past decade. Meanwhile, although the major EM economies are slowing, this is due to domestic problems rather than the scaling back of policy support in the developed world.