Turmoil in a few EMs not a sign of widespread risks

The financial market sell-offs in Indonesia, Turkey and Colombia this week are, in part, a reflection of concerns about strained balance sheets. We think that vulnerabilities in some frontier markets and slow-burning fiscal problems in a handful of larger EMs also merit close attention. But these aren’t symptomatic of widespread vulnerabilities in the emerging world. Indeed, our EM financial risk indicators suggest that balance sheets across most emerging economies are generally healthy.