EM recoveries are beginning to slow and will continue to do so over the coming quarters. Within this there will be regional variation, with Asia the outperformer and Latin America the laggard. Headline inflation rates will end the year above target in most of Latin America and Emerging Europe, slowing the pace of monetary easing. But we still expect the EM monetary easing cycle to broaden out as Asian central banks begin cutting interest rates. Meanwhile, our financial risk indicators suggest that vulnerabilities in the emerging world have eased, though risks remain in some frontier markets.
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