Over the next several years at least, AMEs will find themselves constrained by limited policy space for dealing with macroeconomic challenges. It would not be unreasonable to predict that, to put their public finances in order, AMEs will need to undergo periods of fiscal consolidation.
Monetary policy is also unlikely to offer more stimulus, since policy interest rates remain near zero while major central banks’ balance sheets are already over-stretched. New financial regulations are being implemented, with stronger standards applied to liquidity and capital requirements.