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Anders Aslund

Are Emerging Economies Entering a Lost Decade?

Financial markets are signaling that several major emerging economies may be approaching crisis.

Morgan Stanley has named Brazil, India, Indonesia, Turkey and South Africa the “fragile five.” They share some common characteristics: All took in excessive short-term international financial inflows, which enticed them into accepting excessive current-account deficits for too long. High economic growth has made their governments complacent, even as rising exchange rates undermined their competitiveness. Now their growth rates and exchange rates are falling.