- Unless controlled, rising inflation is a risk for the global economy. Fiscal policies are urgently needed to complement monetary tightening.
- Ongoing macro and geopolitical events have longer-term implications and, in some instances, will result in new winners and losers globally.
- Recent events are re-defining how market participants evaluate ‘vulnerability’ that is typically associated with emerging and frontier markets, with several developed markets suffering from record inflation and possibly energy rationing.
- With a few exceptions, relative to developed markets, emerging markets are well placed to navigate the challenging environment due to relatively better inflation management, fiscal room to boost the economy, access to critical resources (food/energy/metals), and structural advantages such as demographics and low per capita consumption.
- Continuity of reforms is vital for emerging markets to sustain their advantage, boost growth potential and reduce vulnerability.