Predictions for EM’s & Frontier Markets Post CV-19
Predictions for Emerging and Frontier Markets after Covid-19 Investors broadly agree that covid-19 will devastate frontier emerging markets, unleashing economic havoc through slumping domestic and external demand. Yet without sounding unduly optimistic, your correspondent suspects a brighter path: these markets may well outperform. The MSCI Frontier Markets index tracks big firms across 34 countries, from Argentina and Bahrain to Togo and Vietnam. Such economies typically falter from home-grown woes, not foreign shocks. To be sure, the pandemic will lay bare local vulnerabilities, especially where tourism and remittances prop up finances. Sri Lanka, already wobbly, faces a tourism nosedive that could deliver a brutal blow. Nigeria and Egypt, too, stand to suffer from export slumps and remittance droughts. Lockdowns may exacerbate banking strains, as in Bangladesh, where dud loans at state banks equal 30% of GDP amid chronic liquidity woes. That said, a more sanguine assessment—drawn fr...