Decoupling : how immune can be emerging markets to the international financial crisis ?
“Decoupling” has indeed become the buzzword of analysts, investors and corporate officers working on developing countries since the outburst of the financial crisis last summer. The mere fact that economic growth remained very strong in most developing areas, with even some acceleration in key Latin American countries or in part of Asia, has supported the idea that “things are different this time”. In the past decades, any cyclical shock in industrialised countries had a significant impact on world trade and the economic development of emerging markets. TAC is usually very sceptic on such “new paradigm”, as it often only reflect time lags between events. What is the reality today? We share our views with a set of slides used in a presentation by Thierry Apoteker at the IFR Emerging Market conference (London, 24-25 April) and a summary of what Stéphane Colliac heard at a meeting organised by the French think-tanks / administrations CAS and CEPII on April 8. The bottom line is a double and ambiguous conclusion: (1) The current financial crisis will induce a slowdown in world trade and will exert a downward pressure on domestic development in most emerging markets, but the impact will be very different according to countries, from high in Mexico and Turkey to low in Russia, Argentina or Egypt; (2) If the current turbulences develop into a full-blown systemic financial crisis with large contraction in credit distribution in the US and Europe and a lengthy painful period for the financial sector worldwide, the consequences would be massively negative and the “decoupling” will probably disappear under protectionists pressures and financial transmission mechanisms.


The strong euro and the franc zone
This month, Jean-Pierre Patat looks at the franc zone and compare the possibility to devalue the CFA franc against the euro to the more radical measure that involves linking the CFA franc to a euro/dollar basket. English French

IFR Emerging Market conference, 24th & 25th April 2008
T-A-C is sponsoring the IFR Emerging Market conference, which provides a high level strategic overview of the investment outlook and risks emerging markets. The conference will help identify the regions, assets, products and funds that provide both high yield and low risks across the emerging markets.

What perspectives for Vietnam, one year after its accession to WTO? Le Club CEPII and ADETEF, May 22nd, 2008
During the conference, Thierry Apoteker will intervene as a specialist in the Vietnam banking sector. His speech will use the results of a study on the Vietnamese banking system realized at the end of 2007 for the French Development Agency.

The 15th Forecasting Financial Markets Conference, Aix-en-Provence, from 21st to 23rd May 2008
T-A-C will present two working papers during this conference. The first is co-written by Sylvain Barthélémy And Sandrine Lunven and deals with country risk and early warnings on Contagion. The second, presented by Stephane Colliac,aims to evaluate the currency risk premium.

Jean-Pierre Patat- European Parliament
Jean-Pierre Patat has been contracted to delivery regular economic and monetary briefing to the European Parliament. His last contributions are “Developments in the real estate sector in relation with monetary policy” and “An inflation targeting as an alternative monetary policy strategy for the ECB?”.

Academic activities by TAC economists
Thierry Apoteker has delivered a comprehensive teaching seminar on country risk at the HEC Business School in February 2008. Angelo Djistera has presented an article on theoretical analyses of the contribution of human capital in economic growth at the GDR Conference in February 2008. In May, an article co-written by Angelo and Mr Diarra will be presented by Mr Diarra at the Conference organized by the Institut CEDIMES. Stephane Colliac has published an article written with Ion Lapteacru (Bordeaux IV University) in the Journal of Multinational Financial Management, Vol. 18 Issue 2, April 2008 and intitled Three countries’ debt profiles: Average maturities in Mexico, Brazil, and Russia. He is also a member of the scientific committee of the 6th INFINITI Conference on International Finance organized by the Trinity College, which will take place in Dublin on Monday-Tuesday, 9-10 June 2008. Finally Stephane is a keynote speaker for an article which will be published in the Journal of Applied Economics.