Key takeaways

  • Global growth, global trade and commodity prices are amongst the most important global factors affecting EM economies and influencing EM asset prices – what do we expect in 2022?
  • The outlook for Q1 2022 is still cloudy, even though the entry level into the asset class has become attractive for both FX and yields.
  • Currencies are undervalued by historical standards, while advanced hiking cycles in many countries have restored yield support for currencies (particularly in Russia and Brazil).
  • We are only cautiously optimistic on the market given that the continuing disruptions from the COVID-19 pandemic and persistent global inflation create unexpected political slipovers.
  • Economic slowdown in China and the looming start of the rate hikes in the US are the main global headwinds for the beginning of the year.
  • We expect the main world economic centers to grow at a healthy pace in 2022, with lower/stable inflation (US, EU/ China) as the year goes by.

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