Aggregate EM GDP held up better than we had expected over the first half of the year, but we think that a phase of softer growth lies in store over the coming quarters. Our near-term GDP growth forecasts lie below the consensus. With inflation set to fall further, the nascent EM monetary easing cycle is likely to broaden out. Economic vulnerabilities in many of the large EMs have eased significantly in the past year, reducing downside risks to currencies and giving policymakers more room to lower interest rates.
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