HIGHLIGHTS
Monetary policy: With substantial progress made in bringing down inflation, emerging market (EM) central banks look set to kick off monetary policy easing cycles ahead of their developed market counterparts.
China’s slowdown: The world’s second largest economy is facing a challenging period amid weakness in the property sector. Downside risks are growing, threatening to create negative feedback loops.
Economic growth: EM growth appears resilient in the face of a slowing global manufacturing cycle and Chinese economy, but it’s uncertain if it can persist.
Inflation: Important to monitor food prices going forward as they could face upside risks from El Niño and the termination of the Russia‑Ukraine grain deal. This may delay some interest rate cuts, but it’s unlikely to derail them.
Rates, credit, and currencies: While our enthusiasm around EM currencies has abated, the outlook for EM local rates is more positive amid disinflation and central banks rate‑cutting cycles.
