Emerging economies face historic differentiation

The Steering Committee of the International Monetary Fund (IMF) stated earlier this month that the global economy is recovering from the new crown crisis faster than expected. With the rapid increase in the global new crown vaccination rate, the world economic recovery is expected to rise, but uncertainty remains. When the global capital market is facing volatility, the vulnerability of emerging economies has become more prominent, and their road to recovery after the epidemic Will be challenged by multiple factors.

First, the spillover of the US’s unlimited quantitative easing policy threatens the stability of the financial markets of emerging economies. Since the outbreak of the epidemic, the United States and other developed countries have implemented super monetary easing policies. The Biden government has launched a fiscal stimulus policy of US$1.9 trillion and has launched a US$2.3 trillion infrastructure plan to continuously release liquidity to the market. Emerging economies and developing countries Have to bear the negative impact of the spillover of US policy. Under the guidance of Fed policy and expectations of US economic recovery, the yields of US long-term Treasury bonds continue to rise, followed by the accelerated outflow of funds from emerging markets. According to the statistics of the Institute of International Finance, international funds in emerging markets will appear net in early March 2021. The outflow is the first time since October 2020.

Excess liquidity in the United States will further push up global inflation expectations. The inflationary pressure faced by emerging economies has increased sharply, and the prices of bulk commodities and food have risen rapidly. In addition to Brazil, Russia, and Turkey, which are the first countries to start the interest rate hike cycle, it is expected that more emerging market countries will face the dual pressure of high inflation and capital outflow. Increased volatility in the financial markets of emerging economies will severely restrict the process of economic recovery.

Second, the limited vaccination of emerging economies has hindered economic recovery and growth after the epidemic. As of March 2021, 128 million people have been diagnosed with COVID-19 globally, and 2.79 million have died. India, Brazil, and Russia rank second, third, and fifth in the world, respectively, and emerging economies such as Turkey, Argentina, and Mexico The body is also the hardest hit by the epidemic. The epidemic has caused emerging economies to face a difficult situation, limited by factors such as transportation and production capacity. Emerging economies and developing countries lag far behind developed countries in vaccination, and are at a disadvantage in the global battle for vaccines, and are also critical to economic recovery and growth. Have a restrictive effect. According to statistics from Agence France-Presse, as of March 26, 2021, at least 164 countries and regions in the world have received more than 500 million doses of vaccines, of which nearly 54% of the vaccines have been vaccinated by high-income countries, which account for 16% of the global population, and 26% of the vaccines have been vaccinated. The vaccine is vaccinated in the United States, and low-income countries, which account for 9% of the global population, account for only 0.1% of the vaccine dose. The lag in vaccination in emerging economies and developing countries will hinder the recovery of domestic manufacturing, service industries, and foreign trade, and drag down economic recovery and growth.

Third, emerging economies have structural problems that restrict post-epidemic recovery. At present, the GDP of emerging markets and developing economies in the global total has increased from 24.3% in 1980 to 40.6% in 2020, contributing as much as 80% to world economic growth, and becoming the biggest engine of world economic growth. However, the structural problems of emerging economies themselves are gradually restricting economic recovery and growth. On the one hand, the economic growth of some emerging economies is still highly dependent on bulk commodity exports, and violent fluctuations in commodity prices will affect their economies. Form a direct impact. For example, in 2020, the oil price plummeted and the Russian economy heavily relied on oil and gas exports, Russia’s GDP fell by 3.1%, and the single industrial structure greatly weakened the ability of emerging economies to withstand external risks. On the other hand, the industrial upgrading of emerging economies faces challenges, and it is difficult to find new economic growth points and innovation points after the epidemic. At present, the United States and other developed countries are increasing the technological blockade of emerging economies, trying to lock them at the low end of the global value chain. The overall R&D capabilities and market scale effects of emerging economies are limited. As the pillar of economic growth, value-added industries have yet to be further improved in their ability to promote industrial upgrading in the new wave of technological revolution.

Fourth, global geopolitical risks are rising, deteriorating the domestic and foreign environments of emerging economies. Since the COVID-19 pandemic, the global geopolitical environment has undergone profound changes, trade protectionism and populism have continued to prevail, global industrial chains and supply chains have been hit, non-traditional security threats such as terrorism, cyber security, and food security have continued to become prominent, and political games between major powers have continued Intensified, military conflicts in some countries and regions escalated, domestic social conflicts in some countries intensified, and public protests broke out and even turned into a political crisis. Under the circumstances of high uncertainty in the international situation, emerging economies may face the dilemma of lack of national governance capabilities, domestic regime stability and policy coherence are facing challenges, or the negative impact of the deterioration of the regional security situation, economic recovery is even more fragile.

Overall, the economic situation of emerging economies is not optimistic, but emerging market countries in the Asia-Pacific region are expected to take the lead in recovery. The epidemic control in these countries is relatively adequate. Regional economic and trade cooperation represented by the “Regional Comprehensive Economic Partnership Agreement” has continued to advance. In particular, China has taken the lead in realizing economic recovery, which has strongly stimulated regional economic growth and injected new vitality into the Asia-Pacific region. In the future, the economic differentiation of emerging economies may become more pronounced. How to reduce the excessive dependence on developed countries to reduce the risk of financial market volatility, seize the opportunities of the new round of technological revolution and industrial revolution to promote domestic industrial upgrading and improve domestic governance capabilities Improving the business environment will be a common problem faced by the majority of emerging economies, and to a large extent will determine their economic recovery and growth trend after the epidemic.