This
is especially true in India, Brazil, Turkey, South Africa, and
Indonesia, all of which suffer from multiple macroeconomic and policy
weaknesses – large current-account deficits, wide fiscal deficits,
slowing growth, and above-target inflation – as well as growing social
protest and political uncertainty ahead of elections in the next 12-18
months. There are no easy choices: defending the currency by hiking
interest rates would kill growth and harm banks and corporate firms;
loosening monetary policy to boost growth might push their currencies
into free-fall, causing a spike in inflation and jeopardizing their
ability to attract capital to finance their external deficits. - in project syndicate