This change reflects, on the one hand, better information on country conditions and, on the other hand, a better risk assessment. It also reflects better macroeconomic policies and the implementation of internationally agreed standards and codes. However, we have no reasons for complacency.
Even if sell-offs of emerging market debt as an asset class no longer appear to be institutional investors’ preferred response to a crisis, the impact of other forms of contagion should not be underrated. This can still be observed in Latin America. Of course, the sharp contraction of the Argentine economy has real spill-overs for its most important trading partners in the region.