Emerging markets are dropping like flies. They are become a dirty word. From hero to zero. Well not so fast but some of the glister has rubbed off of the high-flyers of the past decade. Just a couple of years ago everyone was talking about the 'Lula effect': how Brazil had transformed itself from seemingly perpetual disappointment to the paragon of the new world. Now it seems to have regressed back to its pedestrian 3% growth path of the past 20 years. India was another. Its economic growth was vying with China's: 8, 9 or even 10% was possible and India's vast 'demographic dividend' was going to embrace new technologies and catapult the economy into the big league within the next generation or two. But in recent years we have seen a dysfunctional political system squander the reforms of the 1990s and Indian growth has plummeted to around 4%. More recently, high-flying Indonesia has fallen foul of investors, stocks plummeted 20% and the top state pension fund had to step in to buy. Is it all over for emerging markets? Well, not really. Things did get a bit ahead of themselves. Money moves in herds and funds poured cash into these economies without really thinking. The emerging market crises of the late 1990s and early 2000s led to significant reforms but after that they have rested on their laurels somewhat. It's human nature. Then easy liquidity from central banks in the US, Europe and Japan hid some of the flaws but these are now being revealed as the cost of money starts to rise again. But it's not over for emerging economies. They still have big populations. low urbanisation rates and low incomes along with growing access to new technologies. They'll be back. The QSL is from Radio Republik Indonesia, Palembang, in southern Sumatra, heard in Morgan Bay in 1993. The station engineer kindly replied in both English and Bahasa Indonesia.
