Against this difficult backdrop, emerging market and developing economies (MEED) face a number of economic challenges, including continued outbreaks of COVID-19, high inflation, unprecedented levels of debt and widening income inequality.

According to the latest edition of the World Economic Outlook, global growth is expected to slow from 5.5% in 2021 to 4.1% in 2022 and 3.2% in 2023, as pent-up demand dissipates and fiscal and monetary support initiatives around the world are phased out.

The rapid spread of the omicron variant, moreover, indicates that the pandemic will likely continue to disrupt economic activity in the near term. Growth is projected to fall from 6.3% in 2021 to 4.6% in 2022 and 4.4% in 2023.

The marked slowdown in major economies including the United States and China will reduce external demand for goods and services in many MEEDs.

Moreover, the slowdown comes just as governments in many of these economies are running out of policy space to respond, if necessary, to emerging challenges: new outbreaks of COVID-19, persistent supply chain bottlenecks and inflationary pressures, and increased financial vulnerabilities in large parts of the world. The combination of these threats could increase the risk of a hard landing in these economies.