Financial vulnerabilities have continued to ease across EMs. Our EM aggregate currency crisis risk indicator hit a multi-year low in Q2, with especially large falls in Turkey and Pakistan. Sovereign debt risks have eased in some places too, with our regional sovereign risk indicator for Africa dropping back to “moderate” for the first time in four years.
The start of the Fed’s monetary easing cycle in September should provide a more supportive external environment for EMs, but there are still some vulnerabilities building. Sovereign debt risks have continued to rise across parts of Latin America and banking crisis risks, although generally low, are creeping higher in some countries.
To explore the EM financial risk indicators for Q2 in more detail please visit our interactive data dashboard here.
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