Many EMs still have a lot of work to do

The good news is that a handful of the early responders to Covid-19, including Korea, Taiwan, Vietnam and the Czech Republic, have successfully flattened their infection curves. As life starts to get back to normal, economic activity should recover in the coming months, although China’s recent experience suggests that this will happen slowly. However, much of Latin America, Africa, Russia and India, where policymakers were slower to react, have had less success in flattening their curves. This suggests that social distancing measures and lockdowns may remain in place for longer, which would delay and limit an eventual rebound in activity in these places. It may also mean that more government support is required to keep private sectors afloat, which will exacerbate debt default risks in Africa and long-term fiscal concerns in Brazil and India.