The elevated interest rate environment is increasing the risk of default in vulnerable frontier markets. Economic uncertainty and high interest rates are weighing on Latin America’s economic prospects. China’s economy is gaining momentum, but its zero-Covid strategy carries the risk of renewed lockdowns.
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Left-wing politician and former guerrilla Gustavo Petro won the Colombian presidential election with 50.4% of the vote, bringing the left to power for the first time in modern Colombian history. Petro's victory is a sign of the widespread desire for a more equal society. He wants to introduce free university education and pension reform. However, his proposal of banning new oil projects is discouraging investors. Oil accounts for half of Colombia’s exports and almost 10% of its national income.
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The UN World Food Price Index is up 22.8% compared to a year ago. Ukraine exports about 10% of the world's wheat and corn production, mainly through its Black Sea ports, which are being blocked by warships. Moreover, rising fertiliser prices are increasing the cost of agricultural production and exacerbating the pressure on food prices. Higher food prices are a particular challenge for emerging economies in which food accounts for up to half the consumer price basket, as they lead to social unrest and weigh on public finances.