We basically think that inflation pressures are likely to ease gradually in line with the deceleration of economic expansion and the U.S. economy is likely to realize a soft landing and move toward sustainable growth, but both upside and downside risks should be borne in mind.
Most banks in emerging market economies are also highly leveraged, but their supervision often has not proved adequate to forestall failures and a general financial crisis. The failure of some banks is highly contagious to other banks and businesses that deal with them, as the Asian crisis has so effectively demonstrated.