Forget the BRICS: what’s really concerning investors now are the “Fragile Five”. The spectre of “global contagion” from Brazil, Indonesia, India, Turkey and South Africa is looming, Alan Ruskin, global macro strategist at Deutsche Bank has warned.
The phrase “Fragile Five” seems to have been first coined by Morgan Stanley analyst James Lord in August. Since then, the phrase has gained increasing traction as a catch-all for the most concerning emerging market economies – which together represent around 7 percent of the world’s economy.
As the cost of employing workers in these countries has risen, there has been less investment from foreign companies, fewer exports and slower economic growth. This has hit those countries’ balance of payments – which measures the balance of a country’s transactions with the rest of the world. If a country’s exports, including financial transactions, are less than its imports it runs a current account deficit.
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