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As emerging economies hit hard times, Brazil and Russia look particularly weak
INVESTORS in emerging markets know how quickly things can turn sour. In the mid 1990s fast-growing Thailand and Indonesia became known as the “Asian Tigers”. By 1997 they were suffering currency crises and had to be bailed out by the IMF. Nearly 20 years on two members of the “BRICs” (Brazil, Russia, India and China) lionised for propping up global growth in 2010, are close to recession. The mixture Brazil and Russia face—falling currencies, high inflation and slow growth—could make 2015 a very bad year.
Trouble has been brewing for a while. Over a year ago James Lord of Morgan Stanley, a bank, labelled Brazil, India, Indonesia, South Africa and Turkey the “fragile five” of the emerging markets. His concern was that the combination of high inflation and big current-account …
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