The perfect storm of surging commodity prices due to the war in Ukraine and the hawkish shift by major DM central banks has pushed a few frontier markets to the brink of sovereign default. Sri Lanka has already announced the suspension of debt payments and Tunisia and a handful of other African economies could be next in line. In many of the larger EMs, the main fallout from the war has come through higher inflation. Central banks in Emerging Europe and Latin America have reacted with large interest rate hikes and we think they will raise rates by more than most expect this year. With price pressures in many parts of Asia less acute, tightening cycles there are likely to be more gradual.
Become a client to read more
This is premium content that requires an active Capital Economics subscription to view.
Already have an account?
You may already have access to this premium content as part of a paid subscription.
Sign in to read the content in full or get details of how you can access it
Register for free
Sign up for a free account to gain:
- Unlock additional content
- Register for Capital Economics events
- Receive email updates and economist-curated newsletters
- Request a free trial of our services