“US recession now!” doesn’t really seem like the most obvious rallying cry for emerging economies. Yet the fact is that a US recession may well be what’s needed to make room for a reliable decline in real US interest rates, and a reliable weakening of the dollar. 

And that loosening of US monetary conditions would certainly do some good for emerging economies now. The recent tightening of those conditions has had some pretty awful consequences for them. It has eroded their access to international capital markets; increased the risk of debt default, especially for low-income countries; and destabilised their currencies, pushing price stability even further from the grasp of even the most adept central bank.

The idea that capital flows will return to emerging markets in the wake of a US recession has some history to back it up. Two episodes are especially worth considering: the early 1990s and the aftermath of the global financial crisis in 2008.