New COVID-19 cases have surged in the emerging world, with India, Emerging Europe and Latin America particularly hard hit. Social distancing measures have been tightened in many countries, which will weigh on activity. The early evidence suggests that the EM recovery had already lost some momentum in Q1 and that’s likely to continue into Q2. Growing headwinds to the economic outlook add to reasons to think that most EM central banks will look through the coming spike in inflation.
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