Key Takeaways
Emerging markets (EMs) face a challenging growth
environment as they contend with squeezed real
incomes, tighter monetary conditions and a still subdued
global trade backdrop.
However, inflation continues to broadly recede across
EMs and the core measure in particular has cooled over
recent months and is likely to ease further before the end
of the year.
All this means more EM central banks can begin easing
cycles before the end of the year, with Latin America
(LatAm)’s central banks best placed to entrench easing
cycles.
That said, challenges remain for EMs given the potential
upside risks to inflation, currency pressures and tight
external financing conditions.
As such, we think a pan-EM easing cycle will be delayed
until 2024, with central banks in Asia being the laggards.
We expect most EMs to have begun lowering policy
rates before the Fed, and cuts to exceed market
expectations as the easing cycle gets underway in the
US.