Survival mode

Question: How have emerging markets stayed strong amid Fed tightening compared to previous cycles?

Ihab Salib: In this cycle, for example, a lot of emerging market central banks began to raise their rates. They changed their monetary policy ahead of the Fed, anticipating the Fed move. That built them a lot of credibility, so the growing credibility of central banks or emerging market central banks, is also a driver to why we're not seeing that cratering that you've seen in the past. Another significant factor is the growth in the middle class, in emerging markets, which has been happening over the last several decades. That makes a reliance on external demand much less than it used to be in the past. Internal demand is a big driver for emerging markets, versus external demand. Finally, many companies that operate in emerging markets are very competitive relative to the developed markets counterparts. They have strong balance sheets, they have very strong cash flow, and they're very flexible in terms of their reliance on revenue externally, as well as internally.