• Sanctions have drastically tightened Russia’s financial conditions.
• We forecast a very deep recession of -15 percent GDP growth in 2022, …
• twice as severe as the 2009 recession and subject to material downside risk.
• Prospects for contagion to the rest of EM depend on the path of war in Ukraine.
• Severe escalation of the conflict will cause EM capital flows to pull back broadly, …
• while a more contained conflict – our baseline – sees divergent fortunes in EM.
• Rising commodity prices help EM commodity exporters, especially in LatAm.
• But Eastern and Western Europe will be hit hard via weaker trade, …
• and big emerging market importers of oil and wheat are at risk.