While some economies - including India and Indonesia - have proved vulnerable to fears of scarcer global liquidity, Asia’s emerging economies still boast stronger macro fundamentals and are better prepared for capital outflows than during earlier crises writes Louis Kuijs, RBS Chief China Economist.
The ability to service foreign debt across much of Asia is substantially less worrisome than in the recent past, exchange rates are more flexible and central banks have larger foreign currency reserves to defend currencies.
Nor have the long-term prospects of emerging markets in Asia changed suddenly. With productivity and income across emerging markets still so much lower than in advanced economies and Asia having shown it can tap such growth potential, these countries are likely to remain the key drivers of global growth in the coming decades.
Nevertheless, we cannot rule out further market turbulence and a further correction, especially given the tendency of financial markets to overreact and overshoot.
Read the full article on RBS Insight: Asia should prepare for more taper turmoil