Moody’s Investors Service predicts that developing countries will have difficulties managing their economic recovery

Moody’s Research Unit Director Atsi Sheth stated that the recession will be more challenging for emerging economies than developed economies. The expert stated that the vaccination rate is still not very high. The new variant omicron has just started to spread globally. The demand in most developing country economies still has not reached pre-pandemic levels. According to Sheth the tightening in monetary policies hindered demand.

Last week, the US Federal Reserve announced that it would end its loose monetary policy, and predicted three interest rate hikes next year to fight inflation. The Bank of England also raised the historically low-interest rate from 0.1 percent to 0.25 percent last week for the first time since the pandemic.

Sheth said, “It will be difficult for developing countries to manage the recovery process. Asia performs relatively better in this regard compared to other regions. The demand momentum is strong in this region, and supply chain problems are decreasing.”

Stating that the rise in inflation will be challenging for countries, he said that inflation in many developing countries has risen due to food and energy prices.