Emerging world powerhouses such as India and Indonesia weathered the turbulence of recent years in solid shape and are widely recognised for their success. Now many of the emerging world’s most troubled economies are reforming their way towards recovery as well, and markets are starting to reward them for it.
They include most prominently Turkey, Argentina, Egypt, Nigeria and Kenya, and they carry some weight. All five of these reforming countries are in the 40 largest emerging economies, so their turn for the better is reinforcing the global economic recovery as well.
Battered by high inflation, debt and deficits, their foreign exchange coffers were emptying when global interest rates rose sharply in 2022. As higher borrowing costs drove their debts deeper into distress, they had no choice but to change. Their leaders — who in Argentina, Kenya and Nigeria were newly elected with a mandate for reform — don’t quite say so out loud, but their plans came straight from the pages of the old and much-maligned Washington consensus. Budget discipline and heeding market forces are the only policy choices that work when a nation runs out of money.