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Abstract 

How resilient are emerging market economies to potentially tougher external conditions, especially if they become prolonged? This paper takes the view that initial economic conditions before the eruption of an adverse external shock matter, and they matter a lot. In particular, the literature shows that policy decisions taken in the pre-crisis period played a major role in explaining a country’s macroeconomic performance during the global financial crisis. With that as the starting point I first identify the relevant variables that need to be assessed to determine emerging markets’ macroeconomic resilience to adverse external shocks. Using a sample of 21 countries, I compare the values of the identified variables in 2007 (the pre–global financial crisis year) with the respective values at the end of 2014. Next, I use the identified variables to construct an indicator of relative macroeconomic resilience for emerging market economies. The ranking does not deliver good news for Latin America. Macroeconomic performance in four of the six countries in the sample is less resilient now than in 2007. India and Malaysia positions have also deteriorated significantly. In contrast, the Philippines and Korea are among the strongest countries. Despite some limitations, the indicator of macroeconomic resilience to external shocks might provide useful information for emerging markets’ policymakers.