EMEs will not be able to decouple in these scenarios. Although many of them face inflationary pressures at the moment, and serious distortions to their domestic economies, they will be quickly caught up in a vortex of imploding demand from the advanced economies and follow them down. Rotating global demand through the timely adjustment of exchange rates and structural reform could prevent this.
Sounds good. Everybody wins. So why hasn’t it happened? Fear, narrow self-interest and political inertia are the reasons. This is why adopting an “After you, Alphonse strategy" is bound to fail. The hope is that, by everyone agreeing to move together, these impediments can be overcome. Everyone should hold hands and take a leap of faith – but not blind faith, mind you.