Annual Meetings

Emerging markets (EMs) have historically been vulnerable to global financial shocks, often experiencing significant economic and financial instability during periods of increased risk aversion. Traditionally, these risk-off episodes have also complicated macroeconomic policy tradeoffs in EMs, as they depress output while simultaneously increasing inflation. These dynamics stand in contrast with the increased resilience observed after the Global Financial Crisis.

Two hypotheses have emerged to explain the improved resilience of EMs. One suggests that EMs got lucky because of more favorable external conditions. A second, yet complementary, explanation attributes the resilience to shifts in investor sentiment to changes in EMs’ monetary, financial, and fiscal frameworks.

The Analytical Corner presentation—based on the October 2025 WEO Chapter on “Emerging Markets’ Resilience: Good Luck or Good Policies?”—will take stock of the EM’s performance during risk-off episodes. The presentation will show the evolution of monetary, macroprudential and fiscal policy frameworks along different dimensions and quantify the macro-financial gains from improved policy tradeoffs.

The analysis will show the extent to which EMs’ resilience is structural and sustainable—rooted in enhanced policy frameworks—or the result of favorable, yet changing, external conditions. As emerging markets prepare for a potentially more volatile global financial landscape, a clearer understanding of these underlying drivers is crucial for framing future policy strategies.