--Shaukat Aziz is the former prime minister of Pakistan. The opinions expressed are his own.--
Emerging markets have seen increasing economic uncertainty in recent months, due to a slowing down in quantitative easing (QE) and a reduction in economic activity. Several countries have experienced rising current account deficits, reducing capital flows, declining foreign reserves and depreciating currency values. Brazil, India, Indonesia, South Africa and Turkey have all seen their currencies drop by more than 10% this year.
These factors serve to lower consumer and investor confidence and delay new investments – in effect, creating a ‘wait and see’ attitude with the result that discretionary expenditure is deferred.
The need for leadership, bold structural reforms and a backstop liquidity cushion has never been greater. The best time to initiate structural reforms is when an economy is strong, capital flows are healthy and current and fiscal deficits within a comfortable range. However, even for those emerging market countries facing a difficult future, it's not too late to push through the required economic and structural reforms.
Deregulation does not mean that the government abdicates its responsibilities to protect public interest, rather it helps to create an enabling environment for investment and growth, while reducing red tape and corruption. These are critical to improve people’s quality of life and deliver healthy long term economic growth. No sector is immune from the need for structural reforms, which must be carefully orchestrated and tailor-made for each country’s specific needs. A holistic reform agenda should cover a wide range of policies including economic, administrative, political and social issues.