Prospects, Risks, and Vulnerabilities in Emerging and Developing Economies: Lessons from the Past Decade

42 Pages Posted: 13 Mar 2020

Date Written: March 12, 2020

Abstract

Growth in emerging markets and developing economies (EMDEs) has generally disappointed since the 2009 global recession, with sizable forecast downgrades in most years. EMDEs continue to face downside risks to growth outlook over the next couple of years. These include heightened global policy uncertainty, trade tensions, spillovers from weaker-than-expected growth in major economies, and disorderly financial market developments. These risks are accompanied by region-specific risks, including geopolitical tensions, armed conflict, and severe weather events. If risks materialize, their impact on EMDEs depends on the magnitude of spillovers and domestic vulnerabilities. Since the 2009 global recession, external, corporate sector and sovereign vulnerabilities have risen in most EMDEs, leaving them less well-prepared for future shocks. Low-income countries, in particular, face elevated vulnerabilities, with about 40 percent of them currently in debt distress. Over the longer run, EMDEs also face weakening potential growth, reflecting decelerations in capital accumulation and productivity growth, as well as demographic headwinds. These constraints are likely to hamper growth in the next decade unless they are mitigated by ambitious and credible reform agendas.

Suggested Citation

Ruch, Franz Ulrich, Prospects, Risks, and Vulnerabilities in Emerging and Developing Economies: Lessons from the Past Decade (March 12, 2020). World Bank Policy Research Working Paper No. 9181, Available at SSRN: https://ssrn.com/abstract=3553575

Franz Ulrich Ruch (Contact Author)

World Bank ( email )

1818 H Street, NW
Washington, DC 20433
United States

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
30
Abstract Views
152
PlumX Metrics