Credit conditions continue slipping across EMs; we now expect a deeper global recession and a slower recovery. COVID-19 has rapidly spread across EM economies, and governments are taking restriction measures to contain the epidemic, halting most business activities and causing unemployment to soar. The combination of extended lockdowns in DM economies and domestic social distancing is deepening the shock to EM economies. Risks remain firmly on the downside given that longer lockdowns could impair household income, corporations' liquidity, and banks' asset quality. The risk of policy mistakes is on the rise, failure to contain the pandemic could lead to longer lockouts at some point and a deeper economic shock. Moreover, the absence of proper economic stimulus could derail recovery and prolong the economic downturn. Most EMs have limited wiggle room in light of weak per capita income, fiscal rigidities, high or rising leverage in some cases, and dependence on external financing in a few countries.