Credit conditions in emerging markets (EMs) will remain pressured during 2023, while economic stress will be taking a toll mostly on sovereigns and households. The balance of risks for EMs is firmly on the downside, given that rapid monetary tightening is potentially pushing major economies into recession and strengthening the U.S. dollar. Financing conditions will probably remain restrictive during 2023, because we expect policy rates and overall financing costs to stay elevated next year.