Itaú BBA - A wider DM-EM divide 

Global Scenario Review

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A wider DM-EM divide 

May 7, 2021

Growth scenario improves in Europe with advances in vaccination. The situation in emerging market economies remains more challenging.

For the version with all charts and tables, please open the attached pdf file

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As DMs (and China) control the pandemic, we see their GDP returning to pre-pandemic levels in a short period, as scarring seems limited. The scenario is much worse amongst EMs.

• Europe: we revised growth to 4.9% (from 4.5%) for 2021 and to 5.2% (from 4.2%) for 2022. We forecast the German 10-year yield at 0% and EUR/USD at 1.22 by year-end.

• U.S.: payroll recovery and transitory inflation in 2Q21.

• China: already at pre-pandemic trend and reducing stimulus. Housing sector will lose steam in 2H21, but with low risk of disruptions.

• India is the latest EM to struggle with the pandemic.

• Global inflation: higher food and metal prices due to climate effects, supply restrictions and strong demand. But, so far, services inflation remains well behaved.

• LatAm: COVID-19 contagion stands in the way of necessary adjustments. 



For the version with all charts and tables, please open the attached pdf file



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