An Emerging Crisis
The COVID-19 pandemic is having a powerful effect on emerging markets.
[Sponsored Article]
By Professor Albert PARK,
Head and Chair Professor, Department of Economics,
HKUST Business School
Professor Alicia GARCIA-HERRERO,
Adjunct Professor, Department of Economics,
HKUST Business School
The center of the COVID-19 pandemic has shifted to the emerging markets. As of August 5, the countries with the most cases of COVID-19 after the US were Brazil, India, Russia, and South Africa, which along with China, where the pandemic started, form the BRICS, an acronym coined in the early 2000s to signify the world’s leading emerging markets. These countries have made important contributions to global growth, especially China. Their struggles with COVID-19 therefore threaten to undermine the global economic recovery. It is not just the BRICS. Highly populous countries with more than 100,000 COVID-19 cases now include Indonesia, Pakistan, Bangladesh, Mexico, Iran, and Egypt. Every country in the world continues to battle the virus and guard against new outbreaks.
A unique feature of the pandemic’s massive economic cost, in comparison to other global crises, is that it has created large shocks to demand and supply at the same time. Demand shocks are both external, as other countries hit by the pandemic reduce their demand for exports and reduce travel to and investment in other countries, and domestic, as people in the country reduce spending due to greater unemployment and fear of leaving their homes.