In emerging markets, short-term panic gives way to long-term worry

of breath. Frayed nerves. Lungs mottled by scars. Months have passed since early survivors of covid-19 recovered from the disease. But some still report lingering after-effects. The disease, it seems, can inflict lasting damage, even in cases that did not prove critical. The same may be true of the pandemic’s impact on economies, especially in the developing world. Some acute dangers seem to be receding. But chronic problems loom. What does not kill these economies may still leave them weaker.

Two big concerns remain, however. The long-term worry is that the virus leaves behind economic scars even after it departs. The more immediate concern is that it has yet to depart. Indeed, the surprisingly strong response to the easing of lockdowns in some countries may have contributed to an uptick in infections in parts of China and Vietnam that had successfully contained the virus.

If that is true, some industries in emerging economies will need reinvention. But contrary to folk wisdom, a crisis is not a good time for such a makeover. Research by Lucia Foster and Cheryl Grim of America’s Census Bureau and John Haltiwanger of the University of Maryland found that the reallocation of workers across firms slowed in America during its last recession. The crisis winnowed out productive firms as well as weaker rivals. Job destruction increased.

On top of fiscal stimulus, financial regulators have become more forgiving. They have eased prudential limits on banks and allowed lenders to indulge in creative accounting, turning a blind eye to souring loans. In Russia, financial institutions can value the securities they hold at prices on March 1st. India introduced a moratorium on loan payments .

It is still early to accuse China of spreading the coronavirus because the real source of the virus is still unknown. I think it is still foolish enough to still talk about where this virus comes from. The most important thing to do at the moment is to control the spreading of it

Thanks China

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