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Emerging Markets Monthly Highlights: Financial Conditions Reflect Optimism, Lockdown Fatigue Emerges

June 4, 2020

Activity in emerging market (EM) economies is picking up, as lockdowns are eased gradually, but the recovery is still very slow. High-frequency data confirm a precipitous slowdown in activity in April across EM globally. While April was likely the weakest month in terms of activity, getting back to pre-pandemic levels will take time. A lockdown fatigue is developing across EMs driven by mounting political pressures and economic costs. Some EMs are gradually lifting the lockdowns after taming the pandemic. In some cases, however, lockdowns are eased despite increasing COVID-19 cases, which could undermine a potential recovery. We now expect the Indian economy to contract sharply in 2020. The COVID-19 outbreak in India and two months of a strict lockdown--longer in some areas--have led to a sudden stop in the economy.


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