EMs with stronger fundamentals should see inflows when they resume

The global environment led to sharp outflows from EM debt markets in 2022. The rise in US interest rates (and increase in EM inflation), combined with the increase in general risk premium, reduced the relative attractiveness of EM debt for global investors, while higher US rates has directly raised the cost of financing for EM dollar debt issuers. Net global portfolio outflows from EM came to just under US$100bn in the first 11 months of the year