Can the World Avoid Another Emerging-Market Crisis?

The Fed's QE unwinding and declining commodity prices are driving emerging market adjustment. Both are a gradual process. The last wave of emerging market currency depreciation is another step in the adjustment process.

The vulnerable economies are the ones with current account deficits and/or declining terms of trade. Brazil, India, South Africa and Turkey fall into that category. The only way to prevent a full-blown crisis is to raise interest rates above the expected inflation rate. India and Indonesia have done a good job in this regard.