Over time, optimism about emerging markets is probably correct. Many
have sound macroeconomic, financial and policy fundamentals. Moreover,
some of the medium-term fundamentals for most emerging markets,
including the fragile ones, remain strong: urbanization,
industrialization, catch-up growth from low?per capita income, a
demographic dividend, the emergence of a more stable middle class, the
rise of a consumer society and the opportunities for faster output gains
once structural reforms are implemented. So it is not fair to lump all
emerging markets into one basket; differentiation is needed.
But
the short-run policy trade-offs that many of these countries face -
damned if they tighten monetary and fiscal policy fast enough, and
damned if they do not - remain ugly. The external risks and internal
macroeconomic and structural vulnerabilities that they face will
continue to cloud their immediate outlook. The next year or two will be a
bumpy ride for many emerging markets, before more stable and
market-oriented governments implement sounder policies.- in Project-Syndicate
Nouriel Roubini is an American professor of Economics at New York University`s Stern School of Business and chairman of RGE Roubini Global Economics