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From Low to High Inflation: Implications for Emerging Market and Developing Economies

Author

Listed:
  • Jongrim Ha
  • M. Ayhan Kose
  • Franziska Ohnsorge

Abstract

Recent energy and food price surges, in the wake of Russia's invasion of Ukraine, have exacerbated inflation pressures that are unusually high by the standards of the past two decades. High and rising inflation has prompted many emerging market and developing economy (EMDE) central banks and some advanced-economy central banks to increase interest rates. Inflation is expected to ease back towards targets over the medium-term as recent shocks unwind, but the 1970s experience is a reminder of the material risks to this outlook. As inflation remains elevated, the risk is growing that, to bring inflation back to target, advanced economies need to undertake a much more forceful monetary policy response than currently anticipated. If this risk materializes, it would imply additional increases in borrowing costs for EMDEs, which are already struggling to cope with elevated inflation at home before the recovery from the pandemic is complete. EMDEs need to focus on calibrating their policies with macroeconomic stability in mind, communicating their plans clearly, and preserving and building their credibility.

Suggested Citation

  • Jongrim Ha & M. Ayhan Kose & Franziska Ohnsorge, 2022. "From Low to High Inflation: Implications for Emerging Market and Developing Economies," CAMA Working Papers 2022-29, Centre for Applied Macroeconomic Analysis, Crawford School of Public Policy, The Australian National University.
    • Handle: RePEc:een:camaaa:2022-29
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    File URL: https://crawford.anu.edu.au/sites/default/files/2025-05/29_2022_Ha_Kose_Ohnsorge.pdf
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    Cited by:

    1. Dennis Nsafoah & Cosmas Dery & Ayobami E. Ilori, 2025. "Revisiting the drivers of inflation in Sub-Saharan Africa after COVID-19," Empirical Economics, Springer, vol. 68(3), pages 1073-1112, March.
    2. Justin Damien Guenette & Philip George Kenworthy & Collette Mari Wheeler, 2022. "Implications of the War in Ukraine for the Global Economy," World Bank Publications - Reports 37372, The World Bank Group.
    3. Carrera, Jorge & Montes-Rojas, Gabriel & Toledo, Fernando, 2023. "Global financial cycle, commodity terms of trade and financial spreads in emerging markets and developing economies," Structural Change and Economic Dynamics, Elsevier, vol. 64(C), pages 179-190.
    4. Francesco Corsello & Matteo Gomellini & Dario Pellegrino, 2023. "Inflation and energy price shocks: lessons from the 1970s," Questioni di Economia e Finanza (Occasional Papers) 790, Bank of Italy, Economic Research and International Relations Area.
    5. World Bank Group, 2022. "Fiscal Implications of the Deteriorating Global Economic Environment for EMDEs," World Bank Publications - Reports 38129, The World Bank Group.
    6. Coccia, Samantha & Russo, Alberto, 2025. "Inflation, inequality and financial vulnerability: Monetary vs. fiscal policy in the face of an energy shock," Energy Economics, Elsevier, vol. 143(C).
    7. Jongrim Ha & M. Ayhan Kose & Franziska Ohnsorge, 2022. "Global Stagflation," CAMA Working Papers 2022-41, Centre for Applied Macroeconomic Analysis, Crawford School of Public Policy, The Australian National University.

    More about this item

    Keywords

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    JEL classification:

    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • E37 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Forecasting and Simulation: Models and Applications
    • Q43 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Energy and the Macroeconomy

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