LONDON (Reuters] – In 2022 emerging markets will experience a “double whammy”, with limited growth and decreased risk appetite, according to David Lubin of Citi’s Emerging Markets Economics.

In a note to clients, Lubin stated that EM growth would suffer from a number of factors, including weakening export demand, lower global trade growth and the effect of continued domestic monetary or fiscal tightening.

Lubin stated that developing nations face an “unsustainable growth model”, which could be impacted by a irreversible slowdown of China, worsening demographics, and growing economic nationalism.

“The probable deterioration in the growth picture for EM raises a challenging question: How will EM attract capital flows?”

Although this is unlikely to lead to a crisis it would increase attention to domestic debt in South Africa and Brazil, which have weak growth rates and high interest rates. This would cause public debt ratios to rise to levels that could be alarming.

As major economies strive to strengthen their supply-chain resilience, countries close to the big, like Mexico, ASEAN and CEE nations, are in better positions than more distant ones, as is South America.