And before moving on, thanks to FTAV for the Climateer linkage.
From the Council on Foreign Relations, August 29:
Almost all oil-importing emerging economies with current account deficits are under market pressure to adjust ...
August 29, 2018
The question is a bit rhetorical.
Some other advanced economies still are running current account deficits. And I don’t think China is really in current account deficit, and if it was, I personally don’t think a small deficit would pose any real problem. China in theory could fund a modest deficit with the interest income on its still substantial reserves ...
But there is no doubt that almost all the oil-importing emerging economies that ran external deficits last year are facing pressure to adjust.
Argentina, obviously.
Turkey, even more obviously.
India—whose current account deficit looks to have widened to just over 2 percent of GDP.
South Africa.
Pakistan, though it is a much smaller economy than the others on this list.
Indonesia (no longer an oil exporter).
Brazil (though it doesn’t have much of a current account deficit).
Even Chile.
All have seen their currencies fall significantly this year.
I don’t expect Turkey’s troubles will prove contagious in the same way as Asia in 1997— India and Brazil have substantial reserves, and thus there is no real risk that a weaker currency will cause them trouble in repaying their external debt. South Africa and Indonesia don’t have access to comparable reserve stockpiles, but they are doing the right thing by letting their currencies adjust. Turkey and Argentina really did stand out as the two emerging economies with the most obvious vulnerabilities going into 2017—they had the largest current account deficits going into 2018, and insufficient reserves on standard debt-based metrics. The others are in a stronger position to manage the crisis through currency adjustment alone, without needing to borrow reserves to avoid a sovereign or bank default.*
But that doesn’t mean the pressure on oil-importers to adjust—meaning tighten policies, slow growth, and look more to exports to reduce their current account deficits—won’t have a global effect....MUCH MORE
No deficits in oil-importing emerging economies and a higher surplus among the oil-exporters (who generally adjusted their imports down after the 2014 oil price shock and now “break-even” with prices in the 50s) means, mechanically, that there need to be adjustments elsewhere....