BASEL, June 30, 2008 (AFP) – Emerging markets, which economists say are able to withstand the current financial crisis, could still be hurt by an economic slowdown in the United States, the world’s top forum of central bankers warned Monday. The Bank for International Settlements said in its annual report that the United States remained a key outlet for emerging market exporters.
A severe US downturn could have more serious consequences for emerging market econonmies than expected.
Domestic demand could also be difficult to shore up in the face of inflation, which is currently sharply higher due to soaring energy and food commodity prices.
In addition, countries with high deficits and high short-term debt would find it harder to secure funding.
“Although growth forecasts remain robust for EMEs (emerging market economies) for 2008, there are risks that this may not continue,” said the BIS, which is also known as the central bank for central bankers.
So far, consensus forecasts indicated a “marked degree of resilience” for the emerging markets, but BIS pointed out that these same forecasts tend to miss crucial turning points.
“Thus, if global developments were to cause a severe downturn in EMEs, it is possible t