Financial crisis in developing economies 'inevitable'

China will be able to avoid a financial crisis that is due to hit other developing countries over the next five to 10 years, a central bank adviser was quoted as saying on Saturday. Li Daokui told a forum that emerging economies such as Brazil and India face fiscal and current account deficits and a crisis was "inevitable," Caijing Magazine reported on its website www.caijing.com.cn.
"China will play an very important role during the financial consolidation. But there will be no such crisis in China because it is quite different from most other developing and developed countries," he said. The US dollar, euro, and the yen are expected to face downward pressure over the medium and long term, he added. In February, the Indian government raised "serious concern" about a trade deficit that could more than double to $278.5 billion in three years and may cause an unquestionable current account deficit. Brazil's current account deficit ballooned to a record for the month of March as foreign companies in Brazil sent more profits home and Brazilians spent more on travel and goods overseas. In January, the International Monetary Fund warned fiscal balances in Brazil, China and India were weaker than the IMF earlier projected, noting a deterioration in Brazil's fiscal accounts was "particularly pronounced."