“With their populations at risk, their public finances stretched, and financial markets in turmoil, many emerging market states and developing countries face a huge challenge. Will they have the resources to ride out the challenge? And if not, where will they look for outside assistance in an increasingly divided and multipolar world in which the United States, the European Union, and China have all been through an unprecedented shutdown?
“At the head of the list of vulnerable countries is South Africa… In Brazil… the currency was reeling even before Bolsonaro decided to discard any strategic approach to the virus. Chile, Thailand and Turkey have all been knocked back. Argentina’s much-needed debt restructuring has been blown off course.
“India’s sharemarket is plunging, its exchange rate has slumped and its banks are under pressure.
“The shock has delivered a blow not just to sharemarkets and government bonds but also to commodities…
“Think of desperately poor Nigeria; think of fragile Algeria, where oil and gas account for 85 per cent of export revenue.”
“The more difficult and pressing problems rise among those countries around the world with weaker external balance sheets. There are a number of emerging economies with more external debt than liquid reserve assets, or for that matter, foreign assets of all sorts. In a crisis, the countries that most need financing are least able to get it.”
https://www.cfr.org/blog/not-one-emerging-market-financial-crisis-many
“Some countries’ banking systems might have to be recapitalized or even restructured if their economies are severely damaged by prolonged disruption from the coronavirus outbreak, officials at the International Monetary Fund said on Tuesday.”
“Zambia’s Eurobonds extended losses on Wednesday after the country asked banks for proposals on reorganizing as much as $11.2 billion of foreign debt.”
https://finance.yahoo.com/news/zambia-seeks-advisers-reorganization-foreign-143143276.html
“Iran’s vice president for economic affairs lamented the free fall of the country’s oil revenue.
“Mohammad Nahavandian told Iranian state TV that oil inventory has dropped to one-eighth of where it stood in 2011… Iran is now wrestling with the coronavirus epidemic, a costly fight that, according to government estimates, will require an extra $1 billion budget.”
“Factory activity contracted sharply across most of Asia in March as the coronavirus pandemic paralyzed economic activity across the globe, with sharp falls in export power-houses Japan and South Korea…
“Manufacturing gauges also tumbled in Indonesia, Vietnam and the Philippines.”
“The [UK’s] National Federation of Fish Friers urged its 10,000 members to shut up shop because social distancing measures could not be guaranteed, although some have continued to deliver.
Cambridgeshire-based potato supplier Abbey Produce said the closure of up to 90 per cent of fish and chip shops has left it with high quality potatoes that retailers cannot take and processors do not want…”
https://www.fginsight.com/news/news/chip-shop-slump-leaves-potatoes-without-a-market-107324
“Hotel industry lobbying groups [in the US] have fired a warning shot, exhorting lawmakers to provide them with financing to avoid a series of debt defaults they say could set off a widespread financial crisis…
“Without the bailout — which would be in addition to government funds from the $2 trillion CARES Act — the industry says its members could be the first in a wave of debt defaults that would hit everyone from real estate investors and pension funds to average homeowners.”
“In a single week in March, as financial markets convulsed and major parts of the economy began shutting down, banks made over $240 billion in new loans to companies — twice as much in new lending as they would ordinarily extend in a full year.
“Brian Foran, an analyst at Autonomous, a research firm that did the calculations, initially thought it was a typo. “That’s really an unprecedented figure,” he said. “I’ve never seen anything like it.””
https://www.nytimes.com/2020/03/31/business/coronavirus-companies-banks-loans-credit.html
“Having a central bank help the government spend by magic-wanding cash into existence has long been considered an economic-policy taboo, a dangerous last resort for failing states.
“But no less an authority than Ben Bernanke has argued that it might be a government’s best option “under certain extreme circumstances.” Now many mainstream economists and Wall Street financiers are arguing that those extreme circumstances have arrived.”
“The Bank of England should print money to fund the Government’s battle against coronavirus and limit its effects on the economy, a former top official has said.
“Sir Charlie Bean called for Threadneedle Street to break a major economic taboo and buy debt directly from the state using freshly minted cash.”
“Suffice it here to pose the question of possible inflationary tendencies due to huge amounts of fiat currency being created out of nothing in order to fight the current crisis.
“In the event that the crisis is in fact averted, one may suspect that the foundation for the next crisis has been laid and that it will be even bigger and worse than the present one, assuming that the present situation due to the coronavirus fear and underlying faults in the system does not lead to the mother of all depressions.”
https://seekingalpha.com/article/4335368-danger-of-inflation
“The Fed is trying to prevent a liquidity squeeze amid a worldwide rush into dollars, as the virus wreaks havoc on a global economy that is heavily dependent on the greenback as its linchpin…
“Emerging-market borrowers are especially at risk. Encouraged by low US interest rates, they’ve loaded up on a dollar-denominated debt in recent years. They now face a squeeze as their exports plummet due to economic shutdowns worldwide to combat the coronavirus contagion.”
“…oil prices for the U.S. and global crude benchmarks suffered the largest quarterly percentage declines on record and lost more than half their value for the month amid a demand slump caused by the coronavirus pandemic and a glut of supply thanks to a Russia-Saudi oil-price war.
“Prices had settled Monday at their lowest level since 2002.”
https://www.marketwatch.com/story/crude-prices-rebound-after-tapping-18-year-low-2020-03-31
“A new quarter has brought a fresh jolt of volatility to global equity markets, with stocks in Europe and Asia dropping as the coronavirus crisis worsens in the US and pressure on global economies mounts.
“The falls, which follow the worst quarter for global markets since the 2008 financial crisis, came after President Donald Trump warned that nearly 250,000 people could die in the US from Covid-19.”
https://www.ft.com/content/db37c3d0-e51b-4542-8bd7-99c946057783
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