First to hike, first to cut

Aggregate EM GDP growth will be much stronger this year than last, but that’s almost entirely a result of China’s reopening rebound. Growth in most other EMs will be weaker and will generally disappoint consensus expectations. An EM monetary easing cycle will begin around mid-year, which is sooner than in DMs. Strong core inflation in Emerging Europe and Latin America means that interest rates won’t be lowered as far as most currently anticipate there. Inflation and rates will remain much lower across Asia. Economic vulnerabilities have eased, but there are pockets of risk including some countries’ banking sectors (e.g. India and Poland) and a handful of EMs with large current account deficits (e.g. Colombia, Hungary and Romania).