The coronavirus will ravage emerging markets, and the economic impacts of the outbreak are likely to linger for years.
Advanced economies have been hit hard by the coronavirus, with rolling lockdowns and overcrowded hospitals quickly becoming the norm, but emerging market and developing economies could take an even bigger hit if nations don’t coordinate to protect them.
“It is our responsibility to extend a helping hand to developing countries and least developed countries to enable them to build their capacities and improve their infrastructure to overcome this crisis and its repercussions,” said King Salman bin Abdulaziz Al Saud of Saudi Arabia in his opening statement to the “extraordinary” virtual meeting of G20 leaders.
The G20 is “gravely concerned” by the risks posed to developing and least developed countries, primarily in Africa and small island states where economies are less capable of dealing with the challenges of the coronavirus outbreak.
“We consider that consolidating Africa’s health defense is a key for the resilience of global health,” the G20 said in a statement.
“We will strengthen capacity building and technical assistance, especially to at risk communities. We stand ready to mobilise development and humanitarian financing.”
Investors have already removed around $83 billion from emerging markets since the outbreak of the virus in the largest capital outflow ever recorded.
“Advanced economies are generally in a better position to respond to the crisis, but many emerging markets and low-income countries face significant challenges,” said IMF managing director Kristalina Georgieva.
“They are badly affected by outward capital flows, and domestic activity will be severely impacted as countries respond to the epidemic.”
Nearly 80 countries have already requested the help of the IMF, which is prepared to dispense all of its $1 trillion lending capacity to countries hit hardest by the outbreak.