Practical analysis for investment professionals
06 February 2014

Poll: Which Emerging Market Is Facing the Most Difficult Economic Challenges?

Posted In: Economics

Many expect that 2014 will be a challenging year for emerging markets. But which emerging market is currently facing the most difficult challenges? In a poll conducted earlier this week in the CFA Institute Financial NewsBrief, we asked readers which of six prominent emerging markets has the toughest road ahead.

Which of the following emerging markets is facing the most difficult economic challenges?

Which of the following emerging markets is facing the most difficult economic challenges?

Nearly a third of 847 respondents chose Turkey. A nation of about 80 million, the world’s 17th largest economy, and an EU (European Union) candidate country since 1999, Turkey is seeing its currency and stocks sliding since 2013 amid increasing talk about U.S. Federal Reserve plans to trim its monthly bond-buying program. After sliding 17% in 2013, the Turkish lira hit its all-time low against the U.S. dollar toward the end of January 2014, and as of Feb. 5, on a 52-week basis, the stock market index Borsa Istanbul 100 is down about 20%.

Although rapid outflows of hot money are a problem for emerging markets at large, anti-government protests last summer and a major corruption scandal toward the end of 2013 have hit the economy hard. Turkey’s central bank has dramatically increased its policy rate, but the lira remains shaky. Turkey’s current problems are arguably more related to governance and politics than to economics. Investors will perhaps be analyzing Turkey’s local elections at the end of March 2014 and its presidential elections in August 2014 to judge if the ruling party will be able to retain a majority in the national elections in June 2015 and if the political storm facing Turkey’s economy will calm down.

Do you want to participate in future polls? Sign up for the CFA Institute Financial NewsBrief.

Please note that the content of this site should not be construed as investment advice, nor do the opinions expressed necessarily reflect the views of CFA Institute.

About the Author(s)
Usman Hayat, CFA

Usman Hayat, CFA, writes about sustainable, responsible, and impact investing and Islamic finance. He is the lead author of "Environmental, Social, and Governance Issues in Investing: A Guide for Investment Professionals;" the literature review, "Islamic Finance: Ethics, Concepts, Practice;" and the research report "Sustainable, Responsible, and Impact Investing and Islamic Finance: Similarities and Differences." He is interested in online learning and has directed three e-courses for CFA Institute: "ESG-100," "Islamic Finance Quiz," and "Residual Income Equity Valuation." The other topics he writes about are macroeconomics and behavioral finance. He has experience working in securities regulation and as an independent consultant. His qualifications include the CFA charter, the FRM designation, an MBA, and an MA in development economics. He has served as a content director at CFA Institute. He is a former executive director at the Securities and Exchange Commission of Pakistan (SECP) and former CEO of the Audit Oversight Board (Pakistan). His personal interests include reading and hiking.

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