The American Federal Reserve is increasing interest rates in order to combat inflation, the dollar is skyrocketing, and the pace of the global economy is slow, still, there is a little change in the situation this time. Experts used to predict tough times for developing countries, but they are experiencing peace. Back in 1980, a debt crisis had emerged in Latin America because of the Federal Reserve’s solutions aimed at frighting inflation.
After the global economic crisis, in 2010, India, Brazil, Indonesia, South Africa, and Turkey were all in trouble. And once again, it was being expected that such a situation will arise. But developing countries, including India, are facing the crisis better than the developed and rich nations. The International Monetary Fund is of the opinion that despite the economic growth rate of China and Russia being affected, developing countries will leave behind the rich countries in economic growth this year.
The Euro, British Pound, and Japanese Yen are dwindling in comparison to USD. The fall of the Indian rupee and Indonesian Rupiah is respectable. Brazil and Mexico’s currencies have strengthened. While in Britain, the Central Bank had to intervene to save the pound. The case of India and other countries standing firm is related to maturity. After the crises of 1980 and 1990, the management of local economic markets and banks has improved. The Central Banks tried to target inflation; many central banks had started increasing the interest rates in comparison to rich countries earlier only, because of which inflation did not go out of control.
But going on the path of the American Federal Reserve, Europe and Japan’s currencies’ value has fallen drastically, and inflation knows no bounds. The governments of India and other developing countries have dealt with the biggest weakness of not being able to take loans in their currencies. Earlier, these countries were forced to take loans in other currencies, but after the global economic crisis and the reduction of profits in the developed countries’ bonds, investors turned towards other countries. This resulted in the buying of bonds in developing countries in their currencies.
Nevertheless, economic stability too, can result in a number of dangers. Due to the satisfactory economic condition of developing countries, many developing countries have taken loans which were considered more for even developed countries earlier. This debt can create troubles later.