Will Emerging Economies Be Affected by the Pandemic Related Downturn in 2020?
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alone, the International Monetary Fund (IMF) estimates that more than $100 billion (€88 billion) in foreign capital was withdrawn from these countries.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.
But one prudent course of action is to prevent the economic conditions that produced these pressures from worsening. Officials need to press on with fiscal and monetary stimulus. And above all, they must refrain from confusing a rebound for a recovery.