Reading 2.2

signs that an emerging market is more susceptible to risk

-wealth concentration

-dominance of cyclical industries

(there’s more but they are obvious)

how do analyst gaugage fiscal policy

look at deficit to GDP ratio

what deficit to GDP ratio is scary

4% or greater

what is a scary debt to GDP ratio

70-80%

what do investors need in terms fo grwoth rate for these risky countries

real growth rate of at least 4%

a current account deficit of what is a warning sign

4% of GDP

what % of foreign debt levels indicate a country may be overleveraged

foreign debt of 50% of GDP

what ratio of debt to current acount is scary

200%

scary % for foreign exhange reserves to short term debt

if the reserves are less than 100%…200% is strong

how do you calculate the number of months of foreign exchange reserves remaining

use ratio of fx reserves to short term debt * 12 months