After two turbulent years marked by COVID-19 and major economic activity disruptions, the global economy experienced just a short-lived post-pandemic recovery as existing challenges and new crises are tipping the world into another big slowdown. The increasing living costs and the unfavourable business environment put policy makers to a test, with the major global central banks occupying the key role. Monetary authorities were compelled to increase interest rates to tame inflation, which, however, put the brakes on economic activity in key developed markets.
Developing markets, on the other hand, are emerging as the bright spot amid expectations that many of them will outperform developed economies in 2023. The positive economic outlook for most EMs and signs of a less hawkish US Fed stance fuel hopes that investor appetite for emerging markets will return after the painful 2022, marked by capital outflows mostly due to the stronger US dollar. Moreover, China’s reopening should provide a powerful support to the emerging world’s recovery.
After two turbulent years marked by COVID-19 and major economic activity disruptions, the global economy experienced just a short-lived post-pandemic recovery as existing challenges and new crises are tipping the world into another big slowdown. The increasing living costs and the unfavourable business environment put policy makers to a test, with the major global central banks occupying the key role. Monetary authorities were compelled to increase interest rates to tame inflation, which, however, put the brakes on economic activity in key developed markets.
Developing markets, on the other hand, are emerging as the bright spot amid expectations that many of them will outperform developed economies in 2023. The positive economic outlook for most EMs and signs of a less hawkish US Fed stance fuel hopes that investor appetite for emerging markets will return after the painful 2022, marked by capital outflows mostly due to the stronger US dollar. Moreover, China’s reopening should provide a powerful support to the emerging world’s recovery.
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