Our proprietary EM financial risk indicators show that vulnerabilities are becoming increasingly isolated, with the number of countries at “high risk” of a crisis now at multi-year lows. Sovereign debt risk has continued to unwind the post-pandemic surge, led by Africa where our regional indicator has fallen to a decade low. Currency crisis risks sit near multi-year lows across most EMs.
Still, there are pockets of concern. In a few EMs, high interest rates coincide with banking sector vulnerabilities, while currency depreciation risks remain elevated in Egypt, Argentina and Turkey. Sovereign default risk is still acute in a handful of smaller African countries, and several “moderate risk” EMs retain fragile fiscal positions, notably Brazil, Colombia and Hungary.
To explore the EM financial risk indicators in more detail please visit our interactive dashboard here.
We’ll be online on Wednesday 11th February at 10.00 ET/15.00 GMT to discuss our EM risk indicators and the outlook for EM financial markets. Register here.
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