EM GDP has proven stronger than expected this year, but we think growth will weaken in the coming months and come in below consensus in 2024. Despite recent upside surprises, inflation has resumed its fall and this should allow the EM easing cycle to broaden out, particularly to Asia. However, strong wage growth and core inflation in Latin America and Central and Eastern Europe will prevent policy from being loosened as much as the consensus expects. While balance of payments vulnerabilities have eased, sovereign debt risks are brewing. These are most acute in Frontier Markets, while there are slow burning problems in parts of Latin America as well as South Africa.
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