A year ago and the 'Asian miracle' was well and truly happening and the decoupling theory was gaining credence. But in the last few months, emerging economies have suffered more dramatically than anyone predicted.
The outflow of funds from emerging markets in 2008 has been hefty. Recent research by EPFR Global showed fund outflows to December of $41.7bn, more than reversing the $40.8bn inflows in 2007.
China, effectively the factory floor of the global economic boom, has been hit hard by the rapid cooling of the economies of the West, attracting significant downgrades to growth forecasts in recent weeks and facing its first year of sub-10 per cent GDP growth in 2009 after five years of continuous double digit expansion. China is also expected to suffer from its first sharp contraction in domestic demand after several years of strong domestic growth. Meanwhile, India's own confidence has been rocked by the recent terrorist atrocities in its financial heart of Mumbai. This knock to confidence follows a year in which India's own economic miracle was also faced with slowing growth forecasts. Its stock market index, the Sensex, has halved over the course of 2008 and will post its worst annual performance since 1991.