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Economics: EMs are on a rocky path to recovery

The acute crisis is nearly over for most of the major EMs

Vaccination rates in the major EMs have picked up sharply, allowing them to safely reopen their service sectors. But the pandemic looks to have permanently damaged their economies, not just in the level of GDP but also their potential growth rate.

But most EMs are likely to suffer from long-Covid symptoms

The long-term damage to EM economies is likely to result in more external defaults and increased political instability. These effects are already becoming clear. More EM sovereign bonds are in distress territory, and there’s been a pickup in coups.

Our risk indicators can help navigate the rocky path ahead

Our Default Risk Index and Austerity Pressure Index screen for risks to external debt serviceability and the need to cut the fiscal deficit, respectively. These tools should help investors navigate the risks that EMs will face over the next few years.

Economics: EMs are on a rocky path to recovery
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