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No emerging mrk crisis - Absa

Johannesburg - Global financial markets are not on the brink of experiencing an emerging markets crisis, said an Absa economist on Friday.

"Emerging markets are in a much better position to withstand a withdrawal of liquidity than they were on those occasions [1997 and 2001]," said Nyiko Mageza, Absa group treasury bond economist.

The current account balances and external debt levels were healthier when compared with those of 1997 and 2001 respectively. Moreover, the current level of foreign exchange reserves held by emerging markets was much higher now than in either 1997 to 1998 or 2001.

This suggested that emerging markets had better economic fundamentals, such as better terms of trade and better government fiscal management.

They were thus less vulnerable to shifting sentiment caused by bad economic management.

Mageza said the South African economy was in much better shape to withstand an emerging markets contagion because of its sound fundamentals.

"It is also anticipated that the increased base in commodity prices will continue to benefit SA as a major commodity producer.

"Government finances have also continued to improve, making SA one of the non-oil producing countries emerging market which has improved its fiscal balances since 2000," he added.

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