Like teenagers, emerging markets have had an awkward relationship with mature economies. In the booming pre-crisis years they became confident enough to boast of decoupling. When the developed world went bang, however, emerging markets wailed like babies. Stocks from Brazil to Hong Kong to Turkey fell 60 per cent. And while they rebounded with youthful vigour, doubts remain. Some attribute poor performance this year to lingering fears of another spasm for the mature economies.
Should they worry? The International Monetary Fund analysed the growth of emerging economies in the aftermath of previous advanced-economy recessions. It found that emerging economies performed better after each successive downturn. In the three years following the recessions of 1974-75 and 1980-83, for example, output levels were not only still down but growth rates had not recovered either. After the 1991-93 and 2001 recessions, however, most emerging economies actually bounced back faster and to higher levels than pre-crisis trends.
Whether this resilience is due to homegrown factors such as better macroeconomic management or more flexible exchange rates is unclear. Perhaps the differing nature of each shock has caused the improvement. Another explanation is that policy responses in mature economies are more effective. What can be said is that decoupling is not the answer. Correlations in output between advanced and emerging economies rose steadily from 1979-2006, and have accelerated in recent years, according to the IMF.