Emerging market credit risks linger despite recovery prospects

Pandemic-related shocks are still evident in emerging market (EM) sovereign and corporate credit risk indicators, says a report from Moody's Investors Service.

Despite some signs of improvement, investors need to be mindful of credit stress across EM sovereigns and non-financial corporates.

“In 2020, the real GDP of G20 emerging market countries, excluding China and Turkey, contracted by close to 6% on average,” said Atsi Sheth, managing director at Moody's Investors Service. “EM economic output is recovering this year, but for many emerging markets, it will be 2022 before it matches pre-pandemic levels.”

The new report from Moody's analyses data across EM sovereigns, financial institutions and non-financial corporations, offering comparisons between EM regions and sectors.

At the same time, EM financial conditions are currently hovering around their...

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