Taking stock of the improvement in EM budget deficits

Budget deficits have narrowed from their 2020 peaks across the emerging world. The improvements in Brazil and Argentina – where deficits appear to be narrower than their pre-pandemic levels – provide welcome relief given both countries’ debt troubles, but we doubt that their public finances will remain so strong. Meanwhile, deficits remain wider than their pre-pandemic levels in much of Asia and Central Europe, largely reflecting fiscal packages which should support economic recoveries.