Despite persistent geopolitical uncertainties and concerns about the impact of weaponization of trade and industrial policies on investor sentiment, 2024 has seen a cyclical turning point for international investors’ appetite for emerging markets and developing countries (EMDCs). This follows years of volatility in investors' appetite for EMDC debt securities, first hit by the COVID-19 pandemic, which led to a record increase in debt workouts, and then by the higher borrowing costs in major developed countries, particularly in the U.S. in response to the fight against inflation, which crowded out investments in many EMDCs, reducing non-residential capital inflows to multi-year lows in 2023 (Chart 1). […]