China's local government (LG) bonds have ballooned since 2018 as LGs were given ever greater bond quotas to finance deficit spending. The recent real estate slump exacerbated the risks as local governments depend heavily on land revenues. LGs are increasingly reliant on CG-LG transfers.

Surging commodity prices due to war should support activity this year. However, net energy importers could suffer, and forceful monetary policy tightening to rein in inflation will likely weigh on growth in most economies. The medium-term outlook remains bleak across major LatAm countries.

We expect the Russian economy to contract by 15% in 2022 due to the war in Ukraine. Sanctions play an important role but so does "self-sanctioning" of foreign companies. Domestic demand will fall sharply, while a collapse in imports will offset lower exports. Together with a decline of 3% in 2023, this will wipe out fifteen years of economic growth. However, the impact on medium- and long-term prospects is likely to be even more severe. "Brain drain" and low investment will weigh heavily on already-subdued potential growth.

The March 2022 edition of the Global Regulatory Update provides targeted updates on current workstreams and events.

The adverse effect of the latest surge in oil prices is likely to be much smaller than those arising from previous shocks. Advanced and emerging economies have substantially reduced the amount of oil used per unit of output.

Frontier LatAm countries stand to lose from the spillovers of the war in Ukraine. Fuel is a key driver of import demand in most countries; we estimate a $10 rise in oil prices yields negative trade effects in the range of 0.4% to 1.0% of GDP. El Salvador, Honduras, and Jamaica look most exposed.

The ongoing war in Ukraine clouds the outlook for Turkey’s external deficit. Foreign demand for Turkish goods and services will likely weaken markedly. Higher energy imports and smaller tourism revenues will also be detrimental. However, a weaker Lira should continue to constrain import volume growth. Lower GDP growth, now forecast to reach 2.2%, should also contribute to this. Risks are to the downside with a prolonged military conflict first among them.

Global sukuk issuance surged to a record $250 billion in 2021, up from $180 billion in 2020; Only $5 billion (2% of the total) was linked to environmental, social and governance (ESG) factors-still a niche market; Indonesia has the largest green sukuk market, followed by Malaysia and Saudi Arabia; A coherent, widely-accepted taxonomy and classification framework would support further ESG sukuk market development.