Nora Szentivanyi and Jahangir Aziz discuss the wide variation in post-pandemic recoveries in emerging markets, the persistent damage to medium-term growth and implications for policy and politics. EM has come out worse than DM in the pandemic. Outside of China, EM GDP is currently about 4% below its pre-pandemic path; the hit has been uneven with gaps of 7% or greater in a number of EM countries, mostly in South Asia and Latin America. Despite the pickup in vaccinations we generally see the weak links continuing to deliver sub-par outcomes. EM will enter an electoral cycle from 2022 and the political economy of permanent scarring will likely affect politics and policies materially, especially in Latin America. The consequences of the pandemic are likely to be long-lasting, lowering potential growth. EM potential was trending lower even before the pandemic and we estimate a further 0.5%-pts hit from the pandemic outside of China.

This podcast was recorded on November 4, 2021.

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