EMERGING markets had another turbulent week. The MSCI EM stock index, comprising stocks from across the developing world, fell 3.2%. The JPMorgan Emerging Market Currency index was down 1.4%, dropping to its lowest level since the benchmark was created in 1999. Losses in equities and currencies across emerging markets have now reached what the Institute of International Finance (IIF), an industry association, calls “crisis proportions”.

There are two main explanations for the recent sell-off. The first is a slowdown in economic growth. Since last year, the International Monetary Fund has cut its 2015 growth forecast for emerging markets from 5.3% to 4.3%. Reduced Chinese demand for iron ore, copper, soyabeans and other raw materials has weighed on commodity exporters, contributing to a drop-off in global trade. According to the Bureau for Economic Policy Analysis (CPB), the Dutch state's economic-forecasting agency, emerging market export volumes fell 3.3% in the first half of 2015.

Expectations of interest rate hikes in America and Britain are another driver of emerging-market turmoil. In the years following the Great Recession, low interest rates and quantitative easing encouraged investors to seek out higher yields in riskier markets. As the Federal Reserve in America prepares to hike rates, capital is now flowing back. Investors have pulled an estimated $44 billion out of emerging-market equities and bonds since mid-July, according to EPFR Global, a data provider.

Are we headed for the kind of financial crises we saw back in the 1990s? Probably not. Developing economies are far less vulnerable now than they were twenty years ago, thanks to stronger current accounts, lower reliance on short-term and foreign-denominated debt, flexible exchange rates and larger reserve buffers. Moody’s, a ratings agency, estimates that just a quarter of emerging market government debt is now held in foreign currencies, down from half in 2000. Reserves in emerging and developing economies have grown from $1 trillion in 2003 to over $7.6 trillion today, according to the IMF. How long they may last, however, is another question.