Credit conditions in emerging markets (EMs) look brighter than last year, given that developed economies' recovery accelerates and vaccination progresses, according to S&P Global Ratings' report published today, titled "Credit Conditions Emerging Markets Q2 2021: Brighter Prospects Prone To Setbacks". These factors are supporting EMs' external demand and industrial activity. Nevertheless, many sectors will continue struggling amid an uneven economic recovery and lackluster domestic demand. Downside risks are relevant and recovery itself will bring new challenges for many EMs, especially if risks from U.S. economy overheating were to materialize and financing conditions worsen. Most EMs continue struggling to contain the pandemic, and with few exceptions, vaccine rollouts have been slow. Consequently, risks from case resurgence, partial lockdowns, and economic activity setbacks prevail.