Social risks will weigh on emerging market sub-sovereigns for years

Regional and local governments in emerging markets generally report weaker access to basic services and higher levels of poverty, inequality and informal employment than their advanced economy peers, which weigh on their growth and financial metrics.

Weak and delayed economic recovery will make it more challenging to restore fiscal and liquidity positions

With the exception of Emerging Europe, emerging market fiscal balances will remain far from their pre-crisis levels through 2022.

CC sovereigns’ reliance on hydrocarbons will remain a key credit constraint despite diversification efforts

Gulf Cooperation Council sovereigns’ ambitious economic and fiscal diversification efforts have so far yielded only limited results, which are hampered by lower oil prices.

Diverging macro prospects split the outlooks across emerging market banking systems

Asset risks will rise as coronavirus support measures are unwound, driving our negative outlooks for banking systems in Africa and the Middle East, while strong loss absorbing buffers and improving operating conditions underpin the stable outlooks in Asia, Latin America and most of Emerging Europe.

Macroeconomics - Emerging Markets: Brazil's and India's first-quarter GDP data suggest strong post-pandemic rebound