Governments that committed the so-called original sin of selling bonds in dollars have reduced their external vulnerabilities by building up record currency reserves and issuing more debt locally. Most countries also have embraced free-floating exchange rates, and inflation in emerging markets, averaging 5.9 percent according to the IMF, is less than half 1995-2004’s 13.1 percent.
“These buffers are extremely important,” Williamson said in a telephone interview. “The market reaction has been exaggerated. I don’t see any major reason to expect a slowdown in growth in the long run.”
That’s small comfort to governments struggling to stay ahead of the rising expectations of disaffected young people, said George Friedman, chief executive officer of policy-risk consultant Stratfor.
“There’s a number of regimes who’ve built their legitimacy on fast growth,” Friedman said in a telephone interview from Austin, Texas, where Stratfor is based. “When they can no longer deliver, they’re setting themselves up for a huge fall.”
Reflecting that anxiety, Turkish Prime Minister Recep Tayyip Erdogan blamed social media for fueling protests against his government’s plans to build a shopping mall in an Istanbul park.
“Right now, the same game is being played in Brazil,” Erdogan told supporters in the northern province of Samsun on June 22. “The symbols are the same, the posters are the same. Same Twitter, same Facebook, same international media. They are being controlled by the same center.”
If turmoil does spread around the world, leaders who have held power longer could be voted out of office or see support plunge, Sharma said. These include Vladimir Putin in Russia, Prime Minister Manmohan Singh’s nine-year government in India and the decade-long run for Rousseff’s Workers’ Party in Brazil, he said.
In the wake of Brazil’s protests, approval of Rousseff’s government plunged to 30 percent from 57 percent in June, putting at risk an expected re-election bid next year.
“The same incumbents who benefited from the boom are now facing the wrath of the electorate,” said Sharma, whose 2012 book “Breakout Nations” criticizes the BRICs for not investing wisely during the boom years. “Leaders didn’t fully realize how much was due to global factors and not their governance.”
While an anti-incumbent wave may be gaining momentum around the world, not all governments will face rejection just because growth disappoints, Gordhan said.
“Governments have different levels of legitimacy and connectivity with their population,” he said, citing as examples the current leadership in South Africa and Brazil, both of which have dramatically reduced poverty during the past decade. The South African government’s original 2.7 percent growth forecast for 2013 is unlikely to be met, he added.
In India -- swept by anti-corruption protests in 2011 -- Singh unveiled a program of food subsidies for the poor after growth slowed in the first quarter to the weakest since 2003.
The $21 billion-a-year effort adds to fiscal strains after the rupee touched a record low July 8, making it harder for the government, which is gearing up for elections next year, to boost infrastructure spending while cutting a deficit almost twice that of Greece as a share of GDP, according to IMF data.
China’s slowdown is being domestically engineered, as the government attempts to rein in speculative lending and real- estate prices. If the clean-up fails, jobs will be lost, adding to social tensions that are increasingly apparent online where dissent is widespread, said Nomura’s Newton.
The number of so-called mass incidents -- strikes, riots, protests and other disturbances to social order -- doubled to 180,000 a year in 2010 from 2006 levels, Tsinghua University sociologist Sun Liping wrote in 2010. The government no longer makes such figures public.
“What nobody knows is what it takes to get people tapping away on cyber space to go out on streets,” he said.
Other emerging markets should also be on the alert.
“When people are disappointed, they go to the streets,” said Michael Shaoul, chairman and chief executive officer in New York of Marketfield Asset Management, which oversees more than $11 billion. “They haven’t given that up just because they’ve had a good decade.”