COVID-19 has not receded in most key emerging markets (EMs) despite governments' efforts, while only few EMs have made progress. Many key EMs have tightened containment measures, delaying phased openings or re-introducing selected measures to contain the spread of COVID-19. These conditions cloud the panorama for a recovery. Downside risk to growth in EMs is also increasing, due to the rising threat of a second wave of COVID-19 infections in several developed economies. A re-imposition of lockdowns in those economies, as they try to contain a potential second wave, could result in another bout of pessimism towards global demand, trade, and commodity prices, slowing the recovery that many EMs had seen in recent months. The impact of COVID-19 is now showing up in lower ratings and the rising pace in defaults.