Nora Szentivanyi is joined by Katherine Marney to discuss an improved macro landscape for EM and what it means for growth, capital flows and monetary policy. The fading of key near-term headwinds has led to a strong start for EM capital flows, and we believe these sources of support, including China’s re-opening, disinflation, and reduced near-term recession risks can last a while. Prospects of a late 2Q Fed pause, weaker USD and better global growth should open up space for EM central banks to ease monetary policy this year. Sustained strength in the US labor market poses a risk to this view. But provided inflation eases as we expect, and barring a re-pricing of the US dollar, we think the macro backdrop can remain supportive for EM. 

 

Speakers

Nora Szentivanyi, Economic Research

Katherine Marney, Emerging Markets Economic and Policy Research

 

This podcast was recorded on 7 February 2023.

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