However, experience has taught us that financial market gains could easily be reversed in times of uncertainty. Emerging markets could still feel the impact of an abrupt and sustained change in global financial conditions and international investor appetite for risk.
Such a scenario could play out in the event of a significant slowing in global growth and rapid reversal of capital inflows in spite of better macroeconomic fundamentals. In a more globalised world, emerging market economies may be more vulnerable to shocks originating in developed economies than was the case previously.