opportunities. while advanced economies implemented historic stimulus programs, emerging markets faced policy tradeoffs and a more limited policy space. the pandemic significantly affected economic activity, external financing, and public revenues. the policy space has been more constrained than in advanced economies due to a dependence on external sources of finance, less resilient fiscal accounts, and weak and pro - cyclical fiscal revenues. taking into consideration the unprecedented nature of the shock, and the deep social scars it has caused, emerging markets have faced the challenge of supporting the economic recovery without compromising macroeconomic and financial stability. as capital - importer economies, emerging markets need to keep ample sources of financing and continuously attract foreign investment. this requires a strong and resilient macro mix, being conscious of the policy space available under additional adverse scenarios, and following a risk management approach as part of policy making. being mindful of the policy space does not justify inaction. comprehensive packages of nearterm support should be implemented jointly with credible medium - term strategies, anchoring macroeconomic sustainability, and promoting pro - growth structural reforms. despite facing a more complex and heterogeneous set of tradeoffs, central banks in emerging markets loosened monetary policy considerably and provided liquidity when needed. in the first months of the pandemic, global risk aversion and domestic financial markets ’ volatility called for a broad set of measures to supply liquidity and credit. in april 2020, banco de mexico announced up to 3. 3 % of gdp in several financing facilities. for mexico, the imf ’ s flexible credit line was a highly valued complement for our external liquidity buffers at a time of acute stress. in addition to avoiding a risk aversion spiral, supporting the recovery through an orderly and sustained reduction of interest rates along the yield curve is needed. this implies being mindful not only of short - term interest rates, but also of medium - and long - term rates, which in emerging markets are largely determined by risk premia. thus, to attain lower financing costs along the yield curve, a solid macroeconomic framework is required, with fiscal sustainability, price stability, and a resilient financial sector. regarding monetary policy instruments, asset purchase programs should not be considered “ over - the - counter ” measures in emerging markets. policy makers need to be mindful that central bank financing to governments can fall into a situation of fiscal dominance. stress tests of fiscal sustainability and availability of sources of finance are needed to avoid

remarks by mr. javier guzman calafell, deputy governor at the banco de mexico, on “ emerging economies in a new global cycle : central bank perspectives ”, at the 9th annual conference organized by the central reserve bank of peru and the reinventing bretton woods committee “ new challenges for global economic integration ”. cusco, peru, july 24, 2017. 1 i thank the banco central de reserva del peru and the reinventing bretton woods committee for the invitation to participate in this event. after having reached a post - crisis low in 2016, global economic activity seems to be transitioning to a faster, although still moderate, growth trajectory starting this year. the recovery is supported by the upturn in global merchandise trade, notably in capital goods, and an improved dynamism in the industrial sector, especially in manufacturing. the improved economic situation in the advanced economies is particularly noteworthy. naturally, this has enhanced confidence in the global economic outlook and reduced the perception of risks deriving from tail scenarios, although these cannot be completely ruled out. notwithstanding these positive developments, the world economy seems to have lost part of the long - term dynamism displayed in the past, as global gdp growth during 2017 - 2022 is forecast to be, on average, almost one percentage the opinions and views expressed in this document are the sole responsibility of the author and do not necessarily represent the institutional position of the banco de mexico or of its board of governors as a whole. point lower than in the pre - crisis years of 2000 - 2007. furthermore, the current juncture continues to be characterized by a number of important risks. to start with, the future evolution of the global economy faces a high level of uncertainty related to the lack of clarity and details about the direction to be taken by economic policy in the united states, particularly on the fiscal, regulatory and trade fronts. second, the recent strengthening of a widespread sentiment against globalization, along with the political support it has been able to garner, certainly threatens to stall, and in some instances even reverse, the progress towards the economic and financial integration of the global economy achieved over the last decades. third, as the ongoing recovery continues, it is natural to expect that the normalization of monetary policy in advanced economies will begin to generalize. while this should in principle be considered as a positive development, it is not free of risks, as it implies a tightening of financial conditions for emerging market economies ( emes ) and a major policy shift with potential