Last year was painful for emerging markets and 2014 is shaping up to be even worse. Among the hardest hit are Brazil, India, Indonesia, Turkey, and South Africa — dubbed the ‘Fragile Five’ by Morgan Stanley last August.
Those countries have seen their currencies tumble 15% to 20% over the past year. And that plunge has continued this month, despite a series of aggressive and, in some cases, unexpected interest rate rises aimed at stopping the rot.
So after years of rapid expansion, and relative calm, what’s going wrong? For one, economic growth has slowed. As a group, emerging and developing economies grew on average by 6.4% over the past decade. Last year, that number was 4.5% and it’s forecast to rise only modestly in 2014.
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