Analysis: Will Coronavirus Pandemic Finally Push Emerging Economies Into Crisis?
By Thomas Kohlmann
It was even worse than after the collapse of Lehman Brothers in 2008. As the COVID-19 pandemic spread across the globe from Asia, foreign investors turned away from emerging and developing markets almost overnight. In the early phase of the pandemic alone, the International Monetary Fund (IMF) estimates that more than $100 billion (€88 billion) in foreign capital was withdrawn from these countries.
It is “a crisis like no other” with “an uncertain recovery,” the IMF described in its updated outlook for the global economy in June. Advanced economies might lose a year or two of economic growth, while developing and emerging countries face a lost decade.
Emphasizing the seriousness of the situation, IMF boss Kristalina Georgieva said never have so many countries asked the IMF for financial assistance at the same time since its founding in 1945. The crisis managers at the IMF fear that a prolonged coronavirus crisis will push the institution to its financial limits.
Photo courtesy of Matryx.