The world has turned full circle. In the early 1990s, the slow-burn financial crisis that came to a climax in 2008 had its origins in the developing world. From Mexico in 1994 to Thailand in 1997 the story was the same: hot money from abroad; asset price booms; overvalued currencies; burst bubbles; hot money rushing for the exit.

Eventually, the malaise wormed its way from the periphery of the global economy to its core: the developed markets of north America and western Europe. Now the focus of the International Monetary Fund is back on the risks presented by the emerging world.

The Fund is not alone in its analysis. Andrew Haldane, the Bank of England’s chief economist, said recently that a fresh meltdown in emerging markets could form part three of a crisis trilogy following the near-death of the banks in 2008 and the threat to the eurozone.

But the IMF’s warning is timely. In recent years investors have piled into emerging markets in a pretty indiscriminate fashion looking for higher returns than have been available in the west. They haven’t looked too hard at the strengths and weaknesses of individual countries or companies.

As in the 1990s, there has been excessive borrowing, much of it in hard foreign currencies. Debt exposure is particularly high in those sectors - construction and energy - that are vulnerable to the ups and downs of the economic cycle.

Finally, despite not being in the best of shape financially, many companies have been able to take advantage of exceptionally low global interest rates to float bonds. The Fund fears that there could be a wave of corporate failures as western countries begin the process of returning policy to a more normal setting.

Financial markets think this will begin later this year with an interest rate increase from the US Federal Reserve, a likely catalyst for the crisis in emerging markets the Fund clearly fears.

If that proves to be the case, the west will feel the impact: losses in the financial sector and deflation as falling currencies make goods from developing countries cheaper. Attempts to “normalise” interest rates may prove short lived.

