Emerging Markets Approach This Downturn Differently

The Economist recently had an interesting article in regard to how emerging markets have changed the way they deal with economic downturns.

Usually, they exacerbate the condition of their economies by raising interest rates in order to support their currencies. This, in turn, significantly prolongs their slump. This time around, though, many of the emerging economies are taking a different approach. They are letting their currencies float freely while generously (some more so than others) stimulating the economy through interest rate cuts and stimulus packages. This gives us hope that this global recession will not last indefinitely and will end sooner rather than later. It also means that emerging markets may very well rebound earlier than the U.S., despite what some of the "experts" on the tube are saying.

Additional Resources:

• Can emerging economies now afford counter-cyclical policies?