The last decade-and-half, despite the turmoil in global financial markets, has been a period of remarkable stability for emerging market (EM) economies.
A decomposition of contributors to the significant decline in the frequency of EM crises during the past 15 years - the unconditional probability of a country experiencing a crisis declined from 12.2% in 1987-99 to 6.2% in 2000-14 - found this.
Evidently, reduction of external debt exposures has been the major contributor - the average ratio of external debt to annual exports declined from 236% in 1987-99 to 123% in 2000-14. The findings,
The estimates suggest that the decline in the observed probability of crisis is primarily due to sharply reduced external debt stocks (estimated to have reduced the average crisis probability by 3.6 percentage points), a substantially higher reserve coverage (-0.6 pp), stronger real GDP growth (-0.3 pp), and improved current account balances (-0.2 pp).