ARE HIGHER INTEREST RATES BAD FOR EMERGING MARKETS?
Emerging market economies have been challenged by longer wait times to receive COVID-19 vaccine supplies and by their limited ability to use fiscal stimulus to counteract the economic drag of the pandemic.
As developed nations’ economies recover, interest rates are heading higher, representing a further potential headwind for emerging markets. Higher rates are typically seen as a negative for emerging markets, as they increase dollar-denominated debt burdens, trigger capital outflows and result in tighter financial conditions.
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