With growth stalled in the advanced economies, external demand is slowing and affecting the exports of EMEs.   The second channel of transmission is capital flows. The crisis is permeating to EMEs through risk aversion and deleveraging to produce volatility in capital flows and in financial markets. This is impacting financing conditions, with feedback to economic activity.
As I mentioned at our last press briefing, that “something” is the way risk behaviors connect, complement, and correlate with each other, creating new channels of risks through contagion. Today, the Council is again with you to share another milestone.