The second half of 2008 saw the credit crisis hit emerging markets, with central banks moving to cut rates, while the decline of the commodities markets meant commodity importers were performing better than exporters, she adds.

"I think what's interesting about this crisis is that it is developed-market led," Schioldager said, pointing out that the big meltdown in the late 1990s—the Russian default crisis and the Asian currency crisis—had their roots in emerging markets.

Banerjee attributes part of the decline in emerging markets to the flight to safety that resulted from the credit crisis, even though the credit crisis had its origins in developed markets. "Emerging markets are the first thing that people dump, because they see them as more risky," she said.

The result was billions of dollars of institutional global money being pulled out of emerging markets, but she noted other factors that also contributed to the developing markets' distress. Those included the declines in the commodities markets (the Dow Jones-AIG Commodity Index fell nearly 40% in 2008, while the Energy-heavy S&P GSCI index fell even further—more than 46%).

Other factors were the strengthening U.S. dollar and falling demand from developed market customers who tend to buy the things that emerging and frontier markets produce.

As previously noted, the BRIC countries were among some of the hardest hit, while frontier markets seemed to avoid the worst of the downturn until late in the year. This makes sense, as the BRIC countries have long been favorites of emerging market investors, plus their economies are more closely linked to those of developed markets, making them more vulnerable to the effects of the pullout of investor dollars, the decline in commodity prices and other factors.

Frontier markets, on the other hand, were not as affected by the flight to safety that occurred because there simply wasn't as much foreign investment in the markets. Schioldager notes that smaller emerging markets have done better because they were less exposed to the global impact.

The Year To Come

BGI's Schioldager says she remains bullish on emerging markets for 2009.

"The projected growth rates and the secular trends that have been in place in emerging markets still exist," she noted.

Those trends include strong infrastructure development, a growing middle class, continued globalization, and young populations, says Schioldager.

She also notes that emerging markets are generally better-positioned to handle crises than before, with better capital account balances and central banks taking action more quickly; they are also paying down foreign-denominated debt for the most part (Ecuador is one notable exception).  

"The basic foundation from which emerging markets sit is still absolutely there, and with valuations being quite cheap, I think EM will do quite well," Schioldager said.

She added that eastern Europe has been oversold and expects continued improvement in China (which has done well in recent weeks) and improvement in Asia in general.

S&P's Banerjee is also striking an optimistic tone.

"I think in the first half of 2009, the general consensus is that it will be tough for all markets in general. And I think that towards the end of the first half, you're going to get a clearer picture of who's emerging better-equipped to deal with this and how they're handling it," she said, adding that what happens with currency and commodity markets will help determine the outcome for emerging markets.

Banerjee believes, in particular, that countries that are not dependent on a single export are more likely to recover quickly.

"Countries that have a strong economic growth pattern—like China, India and Brazil—will pull out of it sooner than others. Because they are large and they have a robust economy, they can withstand these shocks better," she said.

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