Time was when emerging economies had to worry about things as mundane as a run on the bank. But now political uncertainty has replaced purely monetary concerns in judging the direction of emerging markets.
The Turkish lira may still be in trouble, but what will be the economic impact of the recent spats between Ankara and Washington? And while investment in Latin America is still suffering from Argentinas default in 2001, it is political unrest in Venezuela that is so distressing the economics of the region.
Events in Iraq provide challenging conditions as much for emerging markets in the Middle East as throughout the world. The speed with which a country can be designated a terrorist threat may even become an impediment to emerging markets development.
Investor confidence and attitudes have proved as fragile as weak economies. The quasi-flu syndrome SARS has hit capital flows to the whole Asia region over the past few monthssomething unimaginable a year ago.
While emerging market performance has been largely stagnant over the past year, some successes stand out. Russia has received huge inflows and has rewarded investors with significant, albeit unfinished, reforms. Elsewhere in countries such as the Philippines a middle class is rapidly emerging that is providing fast-growing appetite for consumer credit and other banking services. The jury is still out on Brazil, where President Lulas leftism has certainly not merited the doom-mongering with which pundits greeted his election last October.
Global uncertainty makes a near-impossible task of predicting how emerging markets will look in 12 months time. But the banks that will manage those circumstances best will be those with the strategic flexibility to adapt.
In compiling these awards, Global Finance has selected banks that have best weathered the challenging conditions of the past year. Many of them have had to be cautious to do well, but we put a premium on banks ability and willingness to innovate.
We have opted for banks that have not let a slow economy dampen their imagination. With the relatively increasing importance of retail banking we have also preferred banks that do more than institutional banking rocket science. These are the banks most likely to succeed whatever troubles should come their way.