Emerging Markets at the Crossroads: Challenges and Opportunities

Jack Morton Auditorium

Seminar Report

Emerging markets (EMs) are at the crossroads of three major transitions in the global economy: an increase in U.S. interest rates, China’s shift to consumption-led growth, and lower commodity prices. Panelists discussed the challenges, opportunities, and policy tools needed to navigate these transitions.

Key Points:

Comparisons with the global financial crisis. Lipton, Prat-Gay noted that compared with the global financial crisis, EMs are now facing more direct challenges that impact the real economy as opposed to just the financial sector. However, Yudaeva emphasized every country experience is different. For instance, some EM oil importers have actually benefitted from lower commodity prices. In terms of policy coordination, Lipton noted that the emphasis is now more on coordination within economies, ensuring that monetary policy is supported by fiscal policy and structural reforms. 

Policy recommendations. Despite current challenges, panelists though that EMs have the policy space to boost growth in the near term. Lipton emphasized that EMs must address imbalances by dealing with excess capacity and undertaking fiscal adjustment. Lower potential output means that structural reforms are essential, including diversifying the economy and improving the business environment and institutions. EM growth will also depend on the global environment and the Fund can play a role in ensuring that capital flows are supportive of growth. Yudaeva noted that improving market confidence can in itself create policy space.

Capital flows. Prat-Gay noted that EM policymakers have already made considerable efforts to ensure that flows from advanced economies’ monetary policies do not result in credit booms. Frieda observed that the influx of capital flows may have reduced pressures on policymakers to undertake structural reforms. Even though investors may not have differentiated across EMs during the boom period, now they appear to be punishing some countries that have not undertaken structural reforms (e.g. Brazil). 

Oil prices. Despite speculation that OPEC may agree to a production freeze, Lipton, Prat-Gay, Yudaeva noted that there remained uncertainty about the direction of oil prices. Policymakers should continue to take a cautious approach in terms of fiscal planning and taking steps to diversify their economies.

Corporate sector risks. Lipton noted that some EM corporate sectors are under distress as a direct result of the three transitions. Links to the sovereign and banking sectors create additional concerns. Yudaeva noted that in Russia, the concern is more about indebtedness in the non-tradeable sector as the export sector can adjust via the exchange rate. Macroprudential policies are being deployed to address this issue

Russia. Yudaeva remarked that the recent downward revision of the IMF’s growth forecast was more pessimistic than the authorities’ views. She noted that the economy is doing better than expected in the second wave of adjustment to lower oil prices.  Frieda, Lipton commended Russia’s policy response to recent shocks, including through monetary policy, exchange rate flexibility, and addressing budgetary issues.


“There is huge potential for emerging markets to grow rapidly and be the growth engine for the global economy. They need technology. They need investment. They need to educate their population.” David Lipton, First Deputy Managing Director, IMF

“There is a strong sense in the market that China still has to go through a meaningful adjustment process, and the way in which they are [currently] re-stabilizing the economy is not particularly healthy.” Gene Frieda, Partner and Senior Global Strategist, Moore Capital Management

“The Fed over the last few quarters has been a lot more cognizant of the rest of the world…whether this is a good or a bad thing, I leave that question to you.” Alfonso Prat-Gay, Minister of Treasury and Public Finance, Argentina

“Structural reforms are an important global issue. Experience over the last seven years has taught us is that you cannot increase productivity simply by printing money.” Ksenia Yudaeva, First Deputy Governor, Central Bank of Russia

Moderator:  Axel Threlfall, Editor-at-Large, Reuters

Mr. Axel Threlfall is Editor-at-Large, Reuters, based in London. Alongside his editorial duties, he hosts high-profile engagements and thought leadership events for and on behalf of Reuters and Thomson Reuters, such as the Newsmaker series and the World Economic Forum news show in Davos. He was previously Lead European Anchor for Reuters Digital Video. Prior to joining Reuters, Axel spent four years as an anchor for CNBC in London. Before that, he was an editor with The Wall Street Journal in New York and a news reporter for Bloomberg in London. He has also advised businesses and NGOs on their dealings with the international media. Axel is frequently asked to moderate events for international organizations, including the United Nations and the OECD. He has a BA in History from Durham University and a postgraduate degree in journalism from City University, London.


David Lipton, First Deputy Managing Director, IMF

Mr. David Lipton has been First Deputy Managing Director of the International Monetary Fund in 2011. Before coming to the Fund, he was Special Assistant to the President and Senior Director for International Economic Affairs at the White House. Previously, he served as Under Secretary for International Affairs at the U.S. Treasury.

Ksenia Yudaeva, Deputy Governor, Central Bank of Russia

Ms. Ksenia Yudaeva is the First Deputy Governor of Bank of Russia since September 2013 and a member of the Bank of Russia Board of Directors since 18 October 2013. Before this, she was the Chief of the Experts’ Directorate to the Presidential Administration in Moscow from 2012 to 2013. Prior to this, she worked at the Sberbank Centre for Macroeconomic Researches in Moscow as Director, Chief economist and senior advisor to the President from 2008 to 2012. Ms. Yudaeva was awarded the Order of Honour, and commendation of the President of the Russian Federation. She holds a PhD in Economics from the Massachusetts Institute of Technology and graduated from the M.V. Lomonosov Moscow State University in 1992.

Alfonso Prat-Gay, Minister of Finance, Argentina

Mr. Alfonso Prat-Gay is Minister of Treasury and Public Finance, Argentina, since December 2015. He was Governor of the Central bank of the Argentina Republic from 2002 and 2004. He won the 2004 Euromoney Central Bank Governor of the Year award, for having reduced the inflation from 40 to 5 percent while maintaining an economic growth of 8 percent. From 2009 to 2013 he was a member of the Republic of Argentina’s Congress. Before becoming Governor he had worked 7 years at JPMorgan (in London, New York, and Buenos Aires).  He was chairman of Tilton Capital, an asset management company he co-founded in 2005, and president of the Fundación Andares para el desarrollo de las Microfinanzas ("Paths toward the Development for Microfinancing"). He earned a degree in economics from the Universidad Católica Argentina, and obtained his master's degree at the University of Pennsylvania, where he was a PhD candidate.

Gene Frieda, Global Strategist, Moore Capital Management

Mr. Gene Frieda is a partner and senior global strategist at Moore Capital, focusing on global macroeconomic and financial sector policy issues. Prior to joining Moore in 2007, he served as the Global Head of Emerging Markets Research and Strategy and worked as a proprietary trader at RBS between 2002 and 2007, based in London. Between 1995 and 2002, Mr. Frieda ran Global Emerging Markets research, Asian research and Latin American research at various points for IDEAGlobal and 4Cast from bases in New York, London and Singapore. Mr. Frieda earned his M.Sc. in Economics from the London School of Economics and holds B.A. degrees in Political Science and Economics from the University of Oklahoma. He is a member of the World Economic Forum’s Global Agenda Council on Global Imbalances and a senior member of the Political Economy of Financial Markets project at Oxford University.


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