EM easing cycle moving into a new phase

Emerging markets in Asia and parts of Europe will continue to perform well and better than most expect this year, but we think that Latin America will lag behind. The EM monetary easing cycle is entering a new phase as the early movers slow the pace of interest rate cuts while those in Asia that have yet to begin lowering interest rates join the club. EM financial risks, particularly currency risks, have fallen, but we remain concerned about medium-term public debt problems in South Africa and parts of Latin America and CEE.