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The recent economic slowdown has raised concerns about a hard landing in some emerging markets, including China. At least for now, these worries seem overdone as leading indicators are picking up again and inflationary pressures remain largely absent. This, in turn, provides room for further expansionary policy in order to stimulate economic activity.
Following the spike in risk aversion and steep decline of international trade at the end of 2008, economic activity throughout emerging markets (EM) came to an abrupt halt. Against the background of rapidly falling inflation and sound public finances, both monetary and budgetary authorities swiftly turned economic policy into expansionary modus. As a result, industrial and consumer confidence indicators rebounded...
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