The growth outlook for the emerging world has taken a turn for the worse. The latest activity data for China suggest that the post-lockdown recovery has lost steam. The PBOC has responded by lowering interest rates and we expect further easing, but we doubt this support will be enough to prevent more economic weakness. Meanwhile, a combination of softening external demand, elevated inflation and high interest rates is weighing on activity across large parts of Emerging Europe and Latin America, causing some central banks including the Czech Republic (and possibly Poland and Brazil too) to bring their tightening cycles to an end. But with inflation unlikely to drop back to central bank targets any time soon, policy rates will remain high throughout the next 12-18 months.
Become a client to read more
This is premium content that requires an active Capital Economics subscription to view.
Already have an account?
You may already have access to this premium content as part of a paid subscription.
Sign in to read the content in full or get details of how you can access it
Register for free
Sign up for a free account to:
- Unlock additional content
- Register for Capital Economics events
- Receive email updates and economist-curated newsletters
- Request a free trial of our services