There are several reasons why the gradual tightening of monetary policy in developed markets is unlikely to cause major problems for EMs, but one of the most important is that current account deficits have narrowed substantially over the past few years. At various points between 2012 and 2014, nine of the 25 major EMs we cover ran a current account deficit of more than 4% of GDP. Today that number has fallen to just two – Colombia and Egypt.
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