Emerging Markets Outlook: Tariff storm one of many headwinds

EM GDP growth picked up towards the end of last year, but the outlook is increasingly challenging – and not just because of US import tariffs. Weaker capital inflows, lower commodity prices and tight policy will all drag on growth and our forecasts generally sit below the consensus. Slower growth will keep the EM monetary easing cycle going, led by Asian central banks, although high inflation across Central and Eastern Europe (CEE) and Latin America will limit scope for rate cuts there. Financial vulnerabilities generally look contained, but we’re concerned about slow-burning fiscal problems in several major EMs.