Publications: Notes at the Margin

The Emerging Market Threat (September 10, 2018)


The problem has been building for more than five years. Yet with few exceptions, it has been ignored. No attention was paid by those pushing the large tax cut through the US Congress last December. No attention has been paid by those advocating for aggressive US trade policy. No attention was paid to the problem last week by the chairman of President Trump’s Council of Economic Advisers, who predicted strong wage growth for US workers. And certainly no one who follows oil is paying attention. Last week, OPEC’s secretary-general Mohammed Barkindo confidently predicted that global oil use will soon surpass one hundred million barrels per day. Indeed, Barkindo seems to expect continued strength in world oil demand.


Barkindo, those focusing on oil demand, those focusing on the tax cut impact, and those demanding further US aggression on trade are ignoring the most important developing economic problem: emerging-market debt. The debt issue has been festering for half a decade at least and is about to take center stage, possibly taking down global economic growth and oil prices.


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