Welcome to thoughts on the market. I am Reza Mogadam Chief Economic

Advisor for Morgan Stanley. I cover global economic and policy issues. Today I'll

be talking about the impact of the ongoing

pandemic on the emerging markets. It's Thursday, April 16th at 3.30 PM in London.

The coronavirus pandemic which has made its way from Asia to Europe to the US

has now unfortunately begun to impact emerging markets and developing countries such as India, Brazil, Mexico, and many African countries.

Many emerging markets are highly open economies, so they are already suffering from a sudden stop in capital flows and an unprecedented drop in export orders from the rest of the world.

On top of that, faced with weak health systems and densely populated cities, they have no choice but to put

in place protracted lockdowns. This means domestic demand and supply in EMs will also be hit hard.

If we look back at the last global crisis,

emerging markets actually recovered from the 2008 global financial crisis

relatively unscathed.

The question is, will 2020 be different?

We believe it will be at least for three reasons.

First, the starting situation is weaker now than in 2008. In many

emerging markets, vulnerabilities such as public debt and current account deficits are much higher.

Second, China was able to keep economic growth

above 9% in the aftermath of the 2008 crisis. But now China will be lucky to achieve even half that growth in

2020. This will inevitably translate into lower demand for goods and inputs supplied by other emerging markets.

Third, lower oil prices are obviously bad news for net oil exporters.

But even for the vast majority of emerging markets that are net importers,

a lower price may not help much. What use is cheap oil if no one is driving, flying or running generators?

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