Growth to underwhelm as inflation surges

Lockdowns in China and spillovers from the war in Ukraine will slow the EM recovery and growth is likely to be weaker than most expect. Recession risks are rising in Emerging Europe in particular. On the flipside, commodity producers in the Gulf and parts of Latin America are likely to outperform this year. Elevated energy and food prices will keep EM inflation at multi-year highs throughout the year and policymakers in Latin America and Emerging Europe will raise interest rates by more than most expect. Central banks in Asia will tighten monetary policy less aggressively and the PBOC will loosen policy a bit further to support the economy.