After the Asian crisis, the "Washington Consensus" policy choice was rejected by many emerging market countries. The free and open markets with floating exchanges and no capital controls was viewed as a recipe for disaster. Sudden stops would be possible and hot money would rule the choices available to central bankers. Emerging markets moved to a new "Beijing Consensus" of "stable" but more authoritarian controlling governments with policies of high export growth. Financial repression internally would keep investment growth high and capital controls would limit hot money flows.
This new consensus is going to be put to a test in 2014 with slower growth in many emerging markets. The slower growth will lead to more unstable politics which can add a much higher level of market uncertainty. We do not know what will be the longer-term policy choices of Argentina, Ukraine, Turkey, and India to name just a few. The central bank policy of raising short rates will start to cut internal growth which will lead people into the streets. Then what?
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