Emerging markets need less covid-19 and good recovery in advanced countries

09:18 by Hubert Fromlet, Kalmar

Whatever emerging country one looks at, it seems easy to find out that covid-19 still has a negative impact on this group of countries, regardless whether they are already quite advanced emerging markets or very much lagging in their economic development. At the same time, one may also conclude that it has to be realized once more how strongly dependent emerging markets still are on growth development in the OECD area.

Furthermore, we once more have to recognize the problems that arise from lagging transparency and poor statistical quality in most emerging countries. It should be taken as granted that statistical numbers in hidden reality should not be more favorable than officially reported (which, however, indeed happened somewhat more than a decade ago with Chinese GDP growth).

Currently, many official statistical economic indicators in a substantial number of emerging markets again give reason for concern, sending clear warning signals. These warning signals may be related to the balance on current account, budget deficits, foreign debt, inflation etc.

Emerging countries with ongoing macroeconomic troubles and vulnerability can be found on all continents. Just to mention a few: Brazil, Venezuela, Argentina, Chile, Ecuador, Egypt, South Africa, Nigeria, Turkey and Indonesia  – China and India not being analyzed particularly in this context.

Emerging countries need a V recovery in western countries and a turning for covid-19 themselves

Covid-19 has, unfortunately, hit both advanced and emerging countries. However, in both groups of countries uncertainty about the real degree of corona infections remains unclear. Too many countries all over the world have no clue about their own hidden infections. The number of deaths may give some slight indication about the seriousness of the pandemic in certain countries. But we still know too little about this also in our part of the globe, and even less about the real situation in emerging countries.

Statistics can be daily found here https://www.worldometers.info/coronavirus/. In this summary, we find many emerging markets with by far less deaths per 1 million inhabitants than in most Western countries. This fact can certainly be related to so far fewer infected people and many more unregistered deaths in emerging countries. However, we know nothing about the future pandemic in South America, Africa and Asia.

Altogether, it can be concluded that most emerging countries will need to go three steps to their own recovery:

¤  first step: a successful fight against covid-19 in Western countries,

¤  second step: a (starting) recovery in the OECD-area, preferably V-shaped,

¤  third step: a turning point for corona in the individual emerging country.

This will indeed take quite some time!

Hubert Fromlet
Affiliate Professor at the School of Business and Economics, Linnaeus University
Editorial board

 

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