EM GDP growth has started to weaken, and we expect activity to enter a slower phase over the coming quarters. While some economies that underperformed this year will start to recover, many of the EMs that fared surprisingly well in 2023 will slow by more than most expect. Inflation fell sharply earlier this year, but the disinflation process is set to be more gradual from here. And although we expect the EM easing cycle to broaden out in the coming months, strong wage growth and core inflation in Latin America and Central and Eastern Europe will limit how far interest rates can be cut there.
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