The list of countries exposed as central banks tighten monetary policy is longer than monikers such as the “Fragile Five” and “Sickly Six” suggest.
The big worry for investors, as highlighted by the World Bank yesterday, is of an abrupt halt to international financing for the overseas sovereign and corporate debts of vulnerable countries. In a “disorderly adjustment scenario”, financial inflows to developing countries could decline by as much as 80 per cent for several months, the World Bank warned.
When judged by their perceived ability to repay short-term foreign borrowings, the countries particularly exposed to the fallout of tapering are South Africa, Turkey, Brazil, India, Indonesia, Hungary, Chile and Poland, data processed by Schroders and the Financial Times show.