Our proprietary financial risk indicators show that most countries remain well placed to withstand recent shocks, including rising energy prices and higher global bond yields. Our aggregate EM currency crisis risk indicator remains well below its long-term average, EM banking risks have eased slightly over the past year and acute sovereign debt vulnerabilities remain concentrated in a relatively small group of countries.
That said, vulnerabilities are becoming more pronounced in some EMs. Turkey and Egypt are the main net oil importers with high currency risk, even if improved policymaking has provided support amid this year’s energy shock. Turkey also stands alone at “high” banking crisis risk. Sovereign debt risks remain most pressing in parts of Latin America, but are also rising across Emerging Europe, albeit from low levels.
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