Global Macro Service > Research Briefings > Global
The combination of a modest growth outlook in China, with its adverse implications for commodity prices, and a sufficiently positive one in the US economy that the Fed can contemplate a gradual tightening of monetary policy is a threatening one for many emerging market economies. Our scorecard of vulnerabilities and risks suggests that Turkey and South Africa are the two leading emerging economies most exposed to a major deterioration in the global and economic financial situation – partly reflecting their large external imbalances and low levels of real interest rates. This is unchanged from when the scorecard was introduced in April. However, Brazil's ranking is now the third most vulnerable under the impact of a stagnating economy and deepening fiscal and external deficits. Moreover, the outlook will most probably deteriorate further with the re-election of President Rousseff. China's relative position has also worsened over the last six months but it still has huge resources that should help it to weather all but the most severe shocks. By contrast, the rankings of Poland, Malaysia and Indonesia have all improved since April, underpinned by reasonably solid growth prospects and positive real interest rates.
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