GRAPHIC-Fragile Five economies now less so; risks rise for Gulf six
By Sujata Rao and Vincent Flasseur
LONDON Dec 6 (Reuters) - Emerging economies not long ago deemed at risk of crisis are seeing steady balance of payments improvements, while for oil exporters in the Gulf and elsewhere once-mighty cash surpluses have all but melted away.
The so-called taper tantrum of mid-2013 unleashed a wave of selling of assets from developing countries whose big funding or current account deficits left them vulnerable to the withdrawal of cheap money resulting from a slowdown, or taper, in the rate of U.S. money printing.
With oil prices at the time over $100 a barrel these tended to be fast-growing energy importers such as India and Turkey, which, along with Indonesia, Brazil and South Africa, were lumped together as the Fragile Five.
But thanks to the halving of oil prices since mid-2014 and sharply weaker exchange rates, gaps are narrowing, as this graphic (reut.rs/1XKg6ZA) shows.
India's deficit has shrunk to 0.9 percent of annual economic output this year, according to data compiled by JPMorgan, while Ukraine should post a surplus versus an 8 percent gap in 2012.
Others have improved less, with Turkey running a 5.2 percent deficit this year and Brazil, despite economic recession, seeing a bigger deficit than in 2012 at 3.4 percent.
"Lower oil prices are clearly helping to move trade balances so this is positive," UBS strategist Manik Narain said.
"However none of the current account improvements have come through stronger exports," he said. "Governments have inflicted quite a lot of pain on domestic demand to get the current accounts under control." Continuación...