Emerging markets: The great unravelling

Developing economies are suffering their biggest capital outflows since the financial crisis, with the 15 largest emerging economies seeing their biggest capital outflow since the crisis during the second half of 2014. These trends, analysts say, may signal a “great unravelling” of an emerging markets debt binge that has swollen to unprecedented dimensions. The pain inflicted by this capital flight is being felt in the real-life economies of vulnerable countries and in a surging number of emerging market corporations that are forecast to default on their debts. The International Monetary Fund said this week that total foreign currency reserves held by emerging markets in 2014 — a key indicator of capital flows — suffered their first annual decline since records began in 1995. Without steady capital inflows, emerging market countries have less money to pay their debts, finance their deficits and spend on infrastructure and corporate expansion. Full article via the Financial Times (paywall) (VIEW LINK)