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Omicron risks fading, but headwinds remain

Large Omicron waves have caused activity to weaken in many EMs in Q1, but the good news is that mobility appears to bounce back quickly once outbreaks subside. As a result, the economic hit is likely to be small and short-lived. Instead, high inflation and tight monetary policy pose a bigger headwind to growth, particularly in Emerging Europe and Latin America. Drop-In (23rd Feb., 15:00 GMT): We’ll be discussing South Africa’s budget, the risks to the country’s debt profile and the potential impact on FX and bond markets in a 20-minute online briefing on Wednesday. Register here.

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