Why 1998 Was Different, and Same, to Emerging-Market Crisis Now – Bloomberg.
Oil prices were tanking. Emerging-market currencies were in a freefall. Venezuela was mired in a financial crisis and Russia had sunk into a debt default and devaluation.
The year was 1998.
Emerging markets today look a lot like they did back then. Yet there have been key changes that could help most of them escape full-blown crises. Here’s a look at the similarities and differences between now and then.
Similarities
*Falling Oil Prices
Crude has dropped 48 percent since June to about $55 a barrel, squeezing exporters from Venezuela to Russia and Nigeria. Credit default swaps show a 97 percent probability that Venezuela will default on its bonds within five years, according to data compiled by Bloomberg. The Russian economy, which is under sanctions by the U.S. and the European Union over the Ukraine conflict, will contract as much as 4.7 percent next year if oil remains at $60, the central bank said.
