Contextualising post-pandemic EM debt pressures: The MUFG Global Markets Podcast

The COVID-19 pandemic seems to be gradually moving into the rear view mirror. However, the significant deterioration of fiscal balances and public debt build-up across emerging markets is a legacy that will confront investors and challenges policymakers for years to come.

Ehsan Khoman, Head of Emerging Markets Research (EMEA), believes that whilst the likelihood of full-blown near-term EM debt crises is low and contained by abundant global liquidity, low real rates and robust external balances.

However, he cautions that the historical record signals that large fiscal expansions seldom fully mean-revert which could steadily increase the EM risk premium being commanded by investors.

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