9 GLOBAL EVENTS IN2016 THAT HAD THE

BIGGEST IMPACT ONEMERGING MARKETS

Ping Jiang

PING JIANG

From terrorist attacks to a failed coup that took nearly 200

lives, the nation has faced a tumultuous 2016 unlike any in a

decade.

Turkey's turmoil resulted in massive damage to its economy

and tourism industries. Add to that an invasion of Syria by

the Turkish army, a crackdown on Turkish civil society by

dictatorial leader Recep Tayyip Erdogan, and tensions with

Russia--and it's clear that the country has a long road to

economic recovery.

THE TURKISHCOUP

#9

After a long impeachment process, Dilma Rousseff is out of

office, and the Brazilian economy has fallen into depression,

its GDP plummeting 9.7% in the last nine quarters. As a sign

of this trouble, the nation has also been downgraded to

"negative" by credit rating agency Standard & Poor's.

Compounding matters, Brazil’s slump is tied to China’s

diminishing need for Brazilian exports, especially

agricultural goods and raw materials. As China is Brazil’s

largest trading partner, this has worsened the crisis, leading

to a shrinking Real.

BRAZILIANEXPORTS ANDCHINA 'S SLUMP

#8

In December 2015, the Fed raised their interest rates for the

first time in nearly a decade, intending to stabilize inflation

that could threaten a recovering economy. They raised

interest rates again in December 2016.

After the announcement, emerging markets reacted

differently than expected. Many benefited from the move,

among them India. The head of The Reserve Bank of India

claimed that it has helped “take a little bit of pressure off.”

Other nations, like Mexico, felt differently. Combined with

their recent internal financial struggles and anti-Mexico

rhetoric, the peso hit an all-time low in early 2016.

FED RAISINGINTEREST RATES

#7

In June 2014, oil prices reached $115, and global trade saw its

share of winners and losers. In February 2016, oil fell below

$35 a barrel. Emerging market economies now find

themselves in the latter camp, given the export-centric

nature of their economies. Oxford economics have resulted

in seven other nations teetering in the red zone, among

them Nigeria, Iraq, and Angola.

DROPPINGGLOBAL OILPRICES

#6

On 19 December 2016, a truck was deliberately driven into

the Christmas market on one of Berlin's busiest roads. The

terrorist attack, reminiscent of an earlier event in Nice,

France, left 12 dead and 56 injured.

In its aftermath, Germany's open-door refugee policy and

strong economy (it is one of the few Western nations with a

thriving manufacturing sector) is in jeopardy. Tourism is at

a standstill, and the free-trade zone that is the EU is very

much seen now not as a source of economic strength, but as

a liability.

GERMANY 'S CHRISTMASMARKET ATTACK

#5

After 129 people were killed in the tragic November 2015

Paris attacks, the economic aftershocks quickly followed.

Emerging economies took the brunt of it; stock prices fell to

a 6-week low in wake of the attacks, according to the MSCI

Emerging Market Index.

The potential lasting effect is the decrease in European

tourism. Following a string of terrorist attacks in previous

years, France is now perceived as a target country for

terrorism. This has global implications, and stock prices for

airlines in Asia have faltered amidst rising uncertainty

regarding French and European tourism. Turkish Airlines

also suffered a 2.6 percent loss.

PARIS ATTACK

#4

In December, Brazil enacted the harshest austerity program

in the world, all in the name of overcoming a budget deficit

and stopping growing inflation.

After ousting Dilma Rousseff, President Michel Temer

implemented a harsh austerity regime, freezing spending

for twenty years. Not only will budgets not be increased, but

education, infrastructure, and healthcare (among others)

won't see more money until 2037--if Brazil's government

can unite long enough to vote down austerity.

Needless to say, the spending cap is a huge obstacle, holding

back not just economic growth, but also crippling Brazil's

weakest inhabitants: its poor and its elderly.

BRAZIL ’S NEWAUSTERITYPROGRAM

#3

Britain’s decision to leave the European Union may well

send ripples through the world economy.

The hardest-hit EU members included southern and

eastern countries like Turkey, Poland, and the Ukraine, all

of which experienced an average initial drop of 4.1% in their

stock markets, while other EU nations saw just a 2.6% drop.

Internationally, Mexico and South Africa were especially

hard-hit, because both nations export heavily to the UK.

BREXIT

#2

With the unexpected victory of president-elect Donald

Trump, currencies were a bit shaken up. Mexico’s peso fell

he most, plunging 9.4% against the dollar. The South African

rand dropped 2.3% against the dollar, and South Korea’s

won went down 1.7%. Foreign exchanges like Taiwan’s Taiex

dropped 3% and the Philippine benchmark PSEi index

dropped 2.6%.

Turkey’s benchmark 10-year government bond increased as

10.71%, the highest level since February. The yield on a

similar bond in South Africa, Indonesia, and Malaysia also

rose slightly. Bond yields rise when their prices fall.

The culprit? Extreme volatility and uncertainty, all

stemming from unclear policy and fear for the future.

Emerging markets are especially susceptible to geopolitical

turmoil.

Still, European markets were less affected, as the Russian,

Polish, Hungarian, and Czech currencies strengthened.

THE OUTCOME OFTHE US ELECTION

# 1

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