The war in Ukraine will have several economic repercussions for the emerging world. We have lowered our aggregate EM GDP growth forecast for 2022 by 1%-pt, to 3.2%. Russia aside, the biggest downward revisions have been to other Emerging European economies. At the other end of the scale, the jump in commodity prices will boost growth in the oil producers across the Gulf, as well as Colombia. High oil prices will also push up EM inflation over the coming months. With inflation already far above target, policymakers in Latin America and Emerging Europe are likely respond with further (large) interest rate hikes. Meanwhile, external positions in many EMs are likely worsen. This is of particular concern for Chile and Romania where current account deficits are already large, but risks are building in Thailand, India, Poland, Hungary and Peru too.
Commodities Drop-In (24 March, 11:00 EDT/15:00 GMT): Our Commodities team will be exploring how the war in Ukraine is shaking up commodity markets, from oil to wheat, while tackling some of the big market questions – not least whether we’re in for 1970s-style oil supply shocks. Register here.
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