Examples include global investors’ renewed focus on the vulnerable economic structure of these countries as seen in current account deficits amid waning strong growth expectations, speculation on monetary policy conduct in advanced economies, and intensified risk aversion. Such movements in financial markets entail risks that the real economies of these countries will be affected by tightened financial conditions and worsened business and household sentiment.
Although resilience has strengthened in terms of external debt and events are unlikely to lead to a severe situation, future developments warrant continued vigilance. As mentioned, each country and region has its own respective risk, but the baseline scenario is that the global economy will pick up gradually as the U.S. and the European economies improve.