Emerging economies are expected to gradually improve, with growth remaining above those of advanced economies but below rates enjoyed a decade ago. Given more optimism on U.S. prospects, the most favored countries would appear to be those closely linked to that economy. 2 Downside risks to this scenario for the emerging economies include first, lower-thanexpected advanced-nation recoveries.
Second, further significant drops in commodity prices could pose difficulties for export income and the public finances of some countries. During the last few weeks, oil prices, for example, have fallen to levels not seen in four years. A third risk comes from heightened geopolitical tensions, which could hit emerging European economies especially hard.