Paul Krugman: pain ahead for emerging markets

The current situation in emerging markets is looks similar to how it did just before the Asian financial crisis of the late 1990s, says Paul Krugman.

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Paul Krugman,Nobel Laureate and professor of economics at the City University of New York
(Image credit: 2015 Getty Images)

Paul Krugman has joined a growing chorus of experts, from economist Carmen Reinhart to fund manager Mark Mobius, in warning of potential pain for emerging markets, notes Bloomberg. Krugman claims the current episode is similar to the Asian financial crisis in the late 1990s, when the stockmarkets of developing nations (as a group) plunged by as much as 59%, and governments were forced to raise interest rates significantly. "It's become at least possible to envision a classic 1997-1998-style self-reinforcing crisis: emerging-market currency falls, causing corporate debt to blow up, causing stress on the economy, causing [a] further fall in the currency", the Nobel-prize winning economist wrote on Twitter.

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Alice grew up in Stockholm and studied at the University of the Arts London, where she gained a first-class BA in Journalism. She has written for several publications in Stockholm and London, and joined MoneyWeek in 2017.