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EM sovereign debt: where do the risks lie?

The strong dollar and spill-overs from the war in Ukraine have caused sovereign debt risks to escalate in some frontier markets. But most large EMs have far stronger public sector balance sheets, mitigating much of the risk of the “classic” emerging market sovereign debt crises that were prevalent in the 1980s and 1990s. Instead, it is local-currency debt risks that investors ought to pay attention to. While these tend to be more slow-burning in nature, there are reasons to be concerned about debt trajectories in Brazil and South Africa, while vulnerabilities are also increasing in Hungary, Poland and India. Note: We’ll be discussing key takeaways from this report and answering your questions in a 20-minute Drop-In on Tuesday, 17th May. Register now.

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