But besides the comparatively reassuring perception that those crises are unlikely to spill over to us (at least in the short run) through the channel of trade relations, there is increasing concern that the crises might, instead, come right into our “front room” through the channel of financial relations, via the global financial markets.
•  First, the current combination of interest rate hikes and slowing GDP growth in several emerging markets may put stress on domestic borrowers and the banking sector. If this pressure is significant enough, additional capital exit and currency depreciation could be the consequence.