After originating in China, coronavirus began to take hold in many other parts of the world in mid-March. Some other emerging markets (EMs) may be less able to deal with coronavirus than China, or advanced economies, such as the United States.
As containment measures including social distancing, lockdowns and shutting down non-essential businesses have been put in place, pressure on emerging market economies has increased. Capital flows have turned and appear much sharper than those that followed previous episodes of market stress (e.g., the Asian balance-of-payments crisis, the Taper Tantrum and the global financial crisis), potentially setting the scene for crises to unfold.
The ability of emerging market economies to withstand the shock rests on several ̶ sometimes related ̶ factors, in particular:
- Potential for coronavirus to affect the population adversely
- Containment measures
- Structure of the real economy (e.g., exposure to commodities and tourism)
- Financial market reactions
- The extent to which policy can react
Which populations are most vulnerable to coronavirus?
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