IMF: Strong Monetary Policies Support Emerging Markets

IMF Reports: Resilience of Emerging Markets is Increasing

The International Monetary Fund (IMF) has published the analytical sections of the World Economic Outlook and Global Financial Stability reports. The reports emphasize that the resilience of emerging markets has increased in recent years.

Resilience of Emerging Markets

In the relevant section of the World Economic Outlook Report, the resilience of emerging economies against risk aversion shocks was highlighted. According to the report, favorable external conditions, as well as developed policies, have played a significant role in enhancing these countries' resistance to risks.

Local Bond Issuance and Cautious Yields

The Global Financial Stability Report emphasized the ability of emerging countries with strong fundamentals to issue local currency-denominated bonds. This allows them to find new resident buyers in an environment where international investors have low interest in the region.

Emerging economies provide advantages during periods of global stress by offering high investor diversity and more stable bond yields.

Weak Policy Credibility and Borrowing Strategies

However, it has been observed that countries with weak policy credibility and shallower local financial savings pools continue to depend on borrowing in foreign currencies. The IMF emphasized that good governance and reliable policies help these countries become more resilient to shocks.

More Stable Growth and Low Inflation Data

In an IMF blog post, it was stated that stronger fiscal and monetary policies support the resilience of emerging economies. While it was noted that past periods of risk aversion negatively affected these countries, the current situation has changed significantly.

Many emerging economies are now managing fluctuations in global risk appetite better than in the past; during this process, capital outflows are decreasing, and inflation rates are becoming more manageable.