Recovery now in a tougher phase

After an initial burst of growth following the lifting of national lockdowns, the latest activity data and mobility indicators point to a slower pace of recovery in most EMs in recent months. This looks set to continue in the next few quarters. Recoveries in the developed world are shifting into a lower gear, which will weigh on EM exports. The escalating outbreaks in Central Europe are starting to challenge our optimism about the strength of the recovery there. And recoveries in the likes of India and much of Latin America – where new cases remain high – will be constrained by precautionary behaviour and tight restrictions on activity. The exception in all of this is China, where its domestic-focussed rebound is in full swing and looks set to continue on the back of policy support and improving consumer confidence.