Emerging economies remain strong, pessimism not justified: BRICS
Monday, 14 October 2013 00:00
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Reuters: Leading emerging-market nations said on Thursday that the pessimism about their performance is not justified by the fundamentals of economies that continue to drive the global recovery.
The International Monetary Fund warned in a report this week that the unwinding of US monetary stimulus would pose a danger for emerging economies that have slowed sharply after the boom of the past decade.
Economic officials of the BRICS nations – Brazil, Russia, India, China and South Africa – downplayed worries that emerging economies are losing their appeal.
“Our concern is that emerging markets are being called all source of names, fragile, etc when in fact that is not the case,” South Africa’s Finance Minister Pravin Gordhan told Reuters on the sidelines of the IMF and World Bank annual meeting in Washington. “Our fundamentals are pretty sound, although some of them (emerging nations) face particular vulnerabilities, but so do European countries.”
Expectations that the Federal Reserve would reduce its bond-buying program triggered an exodus of investors from emerging markets that raised fears about the strength of those economies. The massive outflow of capital has severely eroded the balance of payments of countries like India and Brazil, dragging down the value of their currencies to multi-year lows and raising inflationary pressures. Still, emerging nations said their economies are ready to face lower global liquidity with hefty US dollar reserves and healthy fiscal accounts.
“We don’t see justification for such a level of pessimism,” Brazil’s Deputy Finance Minister Carlos Cozendey told reporters after a meeting of BRICS finance ministers. “Even the IMF in its report says that despite everything that is happening emerging nations continue to support the global economy.”
Capital outflows have eased since the Fed decided to not taper its stimulus last month.
