Low vaccine coverage makes variants the key risk

Low vaccine coverage means that the threat to economic recoveries from the highly-contagious Delta variant is much larger in the emerging world than in developed economies. And EMs will take longer to return to their pre-crisis path of GDP as a result. In much of Asia, this threat adds to reasons to think that central banks will keep monetary policy loose. But inflation concerns are likely to keep policymakers in Emerging Europe and Latin America in tightening mode.