Emerging markets can withstand an investor retreat better than in 1998, when currency turmoil forced international bailouts,
"There were a lot of things in 1998 that don't exist now," Blankfein, 59, said in an interview with
"Those markets now have better reserves, more flexibility in exchange rates, better policy orientation," he said.
Emerging-market stocks posted their worst start to a year since 2009, evoking comparisons with the Asian financial crisis, as
"There were tailwinds for the emerging markets over the last several years with low interest rates globally attracting funds into those markets and commodity prices climbing," Blankfein said.
"The risk returns to roost, not possibly, but inevitably. It has to. It's part of a cycle."
In the late 1990s, Asian nations, including
"Barriers were defended and when they gave way, it was like a tsunami coming through a dike," Blankfein said of that crisis.
"Central banks of those countries were very underwhelming, while governments were trying to hold currencies at untenable rates."
What happened in 1998 "wasn't the end of the world" and those countries have been doing very well for the last 10 to 12 years, Blankfein said.
"It's going to be like three steps forward, one step back," he said. "Money was flowing very freely-in some cases, maybe freer than it should have-into emerging markets and that's going to have to consolidate."
"We'd be making a mistake if we overfunded it, put too many people, too much investment," Blankfein said. "We want to keep growing our business commensurate with opportunities set in
"The whole world really depends on
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