I said this because Emerging Market Overall, they are under pressure from
- Global interest rates are rising. from fighting inflation in major countries causing the burden of paying more interest
- Energy Crisis and Global Food Crisis That makes energy prices, food prices, fertilizer prices more expensive.
- world economy slowdown which makes exports less
All of this will lead to an increasing trade deficit. and the outflow of money from the group Emerging Market leading to a decrease in international reserves weak currency High inflation and eventually escalated into a crisis.
The more intense the Perfect Storm crisis from the three continents that is hitting the main countries of the global economy such as the United States, Europe, England, Japan, the more intense, the longer the crisis in the Emerging Market will be difficult. only more challenging
What’s interesting regarding the unique emerging market crises this round is that, usually, crises in emerging economies. will occur as an area such as
- Latin American Debt Crisis that started in 1982
- Asian Financial Crisis 1997-98
- Eastern European Crisis following the 2008 global financial crisis.
because countries in the same area They tend to behave similarly, have similar problems. together make the time of crisis will fall at the same time
But in this round, the crisis will spread to every area, every region, as seen in the map below. It will start from a small country. which had weak financial and economic positions first, such as Sri Lanka, Ghana, Pakistan, Lao PDR, and gradually emerged in larger countries over the next two years.
The reason why this crisis will not be in one area is because the problem has a common cause on a global scale, energy prices, food prices, interest rates rising. Debt that everyone borrows easily A large number of people during the war with Covid affected the entire Emerging Market.
Only the weakest will be the one who has weak knees before others make world investors start looking for the next person with the key question “Who is Next?”
ready to gradually move money out of risky countries in the Emerging Market, making these countries have to pay higher interest rates in newly issued bonds
Recently, we can see that the EMBI Global Diversified Composite, the Emerging Markets Treasury Bond Investment Index created by JP Morgan, has collapsed to near the height of the coronavirus crisis!!!
In addition, it was found thatdeveloping country That pays interest on bonds with high spreads of more than 10% compared to US interest rates in approximately 17 countries, the highest number over the 2008 period.
or during the covid period, which over time Fed interest rates are rising It will pressure more countries in the Emerging Market to enter the investor’s radar.
from a very weak country to a weak country passable country This makes it a new Emerging Market crisis that spreads to all areas during the next 2 years.
All means that, eventually, the tail of the monsoon in Emerging Market will slam head-to-head everywhere, including Thailand.
If we prepare well From today, be good, be different, be immune. It’s no different from Covid. that when we know that there is an epidemic Exercise regularly, take vitamins, build immunity. Protect yourself with good hygiene.
we will pass
I’m rooting for everyone.
#Surfing the economy with Dr. Krob. #EmergingMarketCrisis
Thank you for the picture from DW.
