Emerging markets are preparing to receive a reward reward for the rules of the game

[yota691]

Emerging markets are preparing to receive a reward reward for the rules of the game

 

 09 December 2018 02:13 p
Editing: Noha Al-Nahhas

Mubasher : The pessimistic outlook and the difficulties seem to be dissipating in emerging markets, which they can thank the United States for. There is a lesson learned and there is reward.

In an analysis published by the agency Bloomberg View suggests that with the Federal Reserve's tendency to stop rate increases, pressure on countries such as Indonesia will decline significantly.

Emerging markets then will not need to increase interest rates to support the local currency, but they can tend to reduce it, which represents a major change.

As for the lesson, this shift underscores an invaluable fact. With all the talk about disengagement and the US downturn, this optimistic scenario for emerging markets depends on the Fed, which means that developing countries are still unable to control their fate. .

The optimistic outlook for emerging market performance is partly based on the Fed and the other part on arithmetic.

Fed Chairman Jerome Powell and his deputy, Richard Clorida, appeared to be calmer in their comments on the economy and interest rate this month.

The Fed forecasts that it needs a few percentage-point increases each time before reaching a neutral level.

Comparing the recovery that may be brought about by the Fed's relaxation, China's efforts to ease its economic slowdown will not be echoed.

Although China's gross domestic product will exceed its US counterpart in the next decade, its dominance in Asia will increase and the trade conflict will resurface for years, we all believe that we live in a unipolar monetary system and that the dollar remains the important currency.

With regard to the bricast, although it is gaining interest, its impact on the rest of the world is difficult to determine. The ECB will also move away from some easing policies. There is also a chance for the Japanese central bank to move beyond negative interest rates next year.

Like other currency movements, these upcoming events will have marginal effects compared to changes within the Fed.

As for the reward, the countries that have done the right thing and responded to the emerging market downturn in 2018 through realistic and cautious adjustments are now ready to reap the benefits. The IMF commended Indonesia for its record in fighting the recession.

These efforts were to increase interest rates, cut spending, reduce imports and identify industries that could benefit from more foreign investment.

Doing good things also means stopping bad habits, and senior officials in Indonesia have not wasted time talking about conspiracies and pressure groups to raise interest rates as Turkey did.

The Central Bank of Indonesia did not take sudden measures such as sharp rate hike to 40% or higher as the central Argentine, and there was no fighting between the government and the Central Bank, such as India.

Sometimes it is important to do the right thing even if the fruits do not show up on time, and for those who follow the rules, 2019 is likely to become the year of receiving the reward.