Emerging markets are collapsing at the fastest pace since 2022. Expect a wake-up call soon.

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Emerging markets (EMs) are collapsing at an alarming rate, facing their worst stretch since the March 2023 bank runs. The rapid decline of emerging market economies is starting to hit harder than many expected—soon, the world will have no choice but to “wake up” to this grim reality.

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In March 2023, the banking failures of Silicon Valley Bank, Signature Bank, and First Republic Bank rattled global markets, triggering a financial shockwave. While regulators scrambled to stem the tide, the damage was done. The consequences of that panic continue to echo, now fueling instability in the very markets that once seemed poised for growth.

The last six weeks have seen significant turmoil in EMs. Currencies have suffered a steep decline, with many EM nations facing double-digit depreciation against the U.S. dollar. The impact on local economies is devastating, as inflation soars and consumer spending plummets.

Simultaneously, stock markets in these regions have been battered. EM stock indices have dropped drastically, posting double-digit percentage losses in just a month and a half. Investors are on edge, fearing the fallout from rising U.S. interest rates and the uncertainty surrounding global economic stability.

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As currency devaluation and stock market crashes deepen, the emerging markets’ plight grows more desperate. This collapse could be the first sign of a broader financial crisis, one that has the potential to destabilize entire global economies.