- July 5, 2020
- Posted by: dawgenglobal
- Categories: Accounting and Consulting Firms, Advisory
At the beginning of the Covid-19 pandemic, it was hoped that warm weather and younger populations would shield many developing countries from the virus. This hope has not been realised. Cases of infections in Africa, South
Asia and Latin America are still growing. At the time of writing, 17 of the 30 countries with the highest number of reported cases are in the developing world.
This is not only due to the fact that many developing and emerging countries have large populations; if we focus on cases per inhabitants in countries with a population of at least 5 million, about half of the countries in
the list are developing or emerging market economies.
Developing and emerging market countries differ from advanced economies in both the structure of their economies and the tools that can be used to implement macroeconomic policies aimed at reducing the severity and the
economic costs of recession associated with the pandemic. The most important amplifying factors include:
• Pre-existing high levels of poverty and inequality
• A large share of informal workers or workers employed in micro-firms
• A small share of jobs that can be done from home
• A large tourism sector in some countries
• A high prevalence of within-country unrest, violent riots and civil wars
• Relatively small public sectors and tax revenue bases
• Limited fiscal space
• Precarious access to international financial markets.
Developing economies, because of their starting conditions characterised by high poverty, informality and limited fiscal space, may suffer long-lasting consequences from the pandemic. The international community should step
up, by providing aid, technical assistance and debt relief so that countries will not need to decide between saving lives and servicing their debts.
Get copy of a Special Report on COVID-19 in Developing Economies : here