São Paulo – Developing nations have been resisting well to the international economic instability and have uncoupled from developed nations in crisis, maintaining the growth of their economies. This is the evaluation of the International Monetary Fund (IMF) in one of the chapters of the World Economic Outlook (WEO) it disclosed on Thursday (27). Although the institution praises the macroeconomic policy of these nations, between them Latin American and Arab ones, the IMF is questioning how long these nations will survive the crisis and warns: authorities should get ready for “shocks on the horizon”.
In the chapter coordinated by the deputy director of the world economic studies division, Abdul Abiad, the IMF recognizes that governments of developing nations have, in recent decades, created instruments that allow them to “manoeuvre” the economic policy without threatening the sustainable growth of their countries.
“These economies have also become more diversified along many dimensions—in their economic structure, trading patterns, and the composition of their capital flows. On the other hand, recent growth in some emerging market and developing economies has been supported by capital inflows, strong credit growth, and for those that export commodities, by the continued strength of commodity prices. These factors are prone to reversal, which suggests that these economies’ prospects might not be that robust,” says the study.
Still according to the IMF study, in the 1990s, emerging nations had already presented substantially better performance than in the 1970s and 1980s while facing crises like the Mexican, in 1994, the Asian, in 1997, and the Russian, in 1998. “The past decade was particularly good,” recognizes the IMF study. “In fact, the past decade was the first time that emerging market and developing economies spent more time in expansion, and had smaller downturns, than advanced economies.”
Despite praising the developing economies, the IMF warns that the foreign environment may worsen and that, if that takes place, the domestic situation may affect the economic performance of some “key drivers” among the emerging nations. To protect themselves from domestic and foreign risks, developing nations, according to the IMF, need to re-establish their reserves to be better prepared to the new shocks.
*Translated by Mark Ament
