Emerging markets Outlook: getting out from twin shocks?

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In 2019, we do expect some further economic deceleration until the middle of the year followed by a mild re-acceleration in the second half, barring any recessionary scenario in the US and in China. A still constructive but very clouded outlook led us to assess the kind of policy mix that the different EM countries can afford to implement in the event that the economic conditions slip more significantly from our central scenario. We believe that the countries where the monetary policy could turn more supportive are those that are the least externally vulnerable, with better anchored inflation expectations. On the other hand, the built-up fiscal buffers will allow EM to better navigate any challenging times in the future.