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April 17, 2020

Economic outlook: Warning on emerging economy impact – Latin America faces ‘a lost decade’ – Africa needs massive donor support

By Paul Dennis

The IMF, investment bank Morgan Stanley and the UN have all warned of the long-term impact Covid-19 is likely to have on emerging economies.​

Alejandro Werner, writing for the IMF, says economic activity across Latin America is poised to contract by 5.2% in 2020 as a result of Covid-19.

“Given the dramatic contraction in 2020 and as countries implement polices to contain the pandemic and to support their economies a sharp recovery in 2021 can be expected. Yet, even under this quick recovery scenario, the region faces the specter of another ‘lost decade’ during 2015–25.”​

Investment bank Morgan Stanley’s chief economic adviser Reza Maghadam has warned that emerging markets are: “already suffering from a sudden stop in capital flows and an unprecedented drop in export orders from the rest of the world.​

“Emerging markets largely escaped the 2008 global crisis and recovered quickly. Let’s hope they prove as resilient this time, but a bumpy road definitely lies ahead.”​

Meanwhile, secretary general of the UN Conference on Trade Development Dr. Mukhisa Kituyi has said Africa needs massive donor support to weather the Covid-19 crisis:”On the economic front, things could hardly be worse.

“The top 5,000 multi-national enterprises in the world are revising down earnings estimates between -30 per cent and up to -200 per cent for this year.​

“Loss of export earnings both through disruption of supply chains and lockdowns is projected to cost Africa upwards of $500 billion.”

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