a “heterogeneous” impact of inflation and the slowdown in the Chinese economy

Emerging Markets and Developing Economies (EMDEs) have suffered a “heterogeneous” impact from external shocks induced by the Russian-Ukrainian conflict and the slowdown in the Chinese economy, according to a Policy paper from the Policy Center for the New South (PCNS) .

Emerging and developing countries face a range of external shocks, including rising energy and food prices, tighter monetary policies and the return of Chinese containment measures, writes Otaviano Canuto, author of this policy brief, dealing with the impact of economic shocks on the EMDE group.

The impact of these shocks on emerging markets and developing economies is heterogeneous, insofar as commodity-exporting countries have seen their growth accelerate, while other indebted economies of the EMDE group would face new challenges, adds Otaviano Canuto.

Thus, this policy brief has distinguished four subgroups among the EMDEs, depending on the impact of these shocks on their economy, the first group being composed of Russia and Ukraine. The second group is made up of countries exporting raw materials (except Russia) which will benefit from more favorable trading conditions. “While not enough, improved tax revenues provide fiscal space to mitigate rising domestic energy prices,” the author explained.

The third group corresponds to importers of raw materials, dependent on industrial exports, who are suffering the impact of both the rise in energy and food prices and the slowdown in global growth, he said. it belongs. The fourth subgroup includes developing economies struggling with indebtedness inherited from the pandemic, Canuto said, noting that higher debt and less favorable financial conditions make it difficult to finance their current fiscal deficit.