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Mounting headwinds set stage for sluggish growth

EM GDP growth has slowed sharply this year and is likely to remain sluggish in 2023 and 2024 as weak external demand and tight financial conditions take their toll. Having started hiking rates much earlier than their DM (and Asian) peers, central banks in Emerging Europe and Latin America will soon end their tightening cycles, but elevated inflation will prevent them from loosening policy until at least the middle of next year. Asian central banks are likely to join them in cutting rates around the end of 2023.

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