The wealth effect of stock market changes on consumption and investment, although statistically significant, is found to be weaker in EMEs vis-à-vis the advanced economies. Furthermore, such wealth effects tend to play out gradually.
During the financial turmoil, commodity prices may have been pushed higher to some extent by increased demand for commodities as a hedge against a depreciating US dollar and possibly also as a hedge against higher inflation. As global growth slows, a fall in commodity prices represents a downside risk to commodity-exporting EMEs, which is particularly relevant for some Latin American EMEs.