Question

Identify and discuss at least five issues emerging economies face

Answer 1

This is a very generic and open ended question. I have put together my thoughts below. Please use this as a framework, apply your own thoughts and frame your answer.

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Emerging economies do offer great rewarding opportunities but against a backdrop of risks, challenges and issues. Some of the issues faced by the emerging economies are as mentioned below:

1. Rising levels of foreign currency debt: The emerging economies borrowings in foreign currency has increased. And the economies that have foreign debt borrowed in $ have higher risks. The interest rates are rising and $ is strengthening. Countries in Africa, Latin America and the Middle East have major issues linked to foreign currency debts. They are likely to face rating downgrades due to this.

2. Trade tensions: The case of China USA trade tensions worth a mention here.

3. Strengthening dollar: This straightway impacts the international trade.

4. Inadequate infrastructure: Lack of innovation coupled with high population density, giving rise to inadequate infrastructure.

5. Poor public health or poor human development index

6. Stringent and restrictive labor regulations

7. Complicated tax regimes: Higher incidences of taxes, economies are still plugged with tax evasion and avoidance.

8. Lack of inclusive growth, income level disparity, income inequality: Though the gap is reducing over a period of time, the gap is still huge.

9. Non performing assets of the banking sector: The banking sector continues to see increase in non performing loans.