A protracted conflict and heightened frictions in global value chains could also lead to a more pronounced cyclical slowdown than is currently expected and to a subsequent worsening of the financial situation of households and firms, making it necessary to operate prudently when classifying loans, booking loan loss provisions and distributing earnings.
Moreover, some of the policy space the EDEs built over the past decade was used up during the global crisis and has not yet been  2  Frankel, Jeffrey, 2012, “Will Emerging Markets Fall in 2012?” Business & Management Journal, Vol. 2, No. 2, pp. 119–20.