The weakest balance sheets in the emerging world are concentrated in the Frontier Markets and, as a result, balance of payments crises occur more regularly. This lies behind Venezuela’s crisis, but also a growing inflation problem in Zimbabwe and (to a lesser extent) Tunisia and Nigeria. But perhaps the most important development is that these kinds of inflation problems are becoming increasingly rare and improved central bank policymaking and stronger balance sheets have reduced inflation to comfortable levels in most Frontier Markets. This will have positive long-term consequences for economic growth. More immediately, it has allowed central banks to loosen policy.
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