EMD unaffected by coronavirus

Emerging market (EM) debt has so far escaped unscathed from the coronavirus as it is expected it will only cause a temporary impact on growth in these markets and could be a benefit to certain markets, according to Eaton Vance.

While the risks would increase if the pandemic got worse, any long-term impact would depend on these countries’ economic ties to China.

This meant markets such as the Dominican Republic and Mexico could do better from the scandal as a result of falling import prices.

The Eaton Vance emerging market debt team said: “The longer-term impact on EM countries will likely depend on their economic ties to China. For example, in Southeast Asia, countries that are part of the Chinese manufacturing supply chain could face a slowdown.

“Additionally, many Asian countries will be affected as tourism from China likely declines. More broadly, commodities exporters globally will be hit as commodity prices fall due to reduced demand from China. Likely examples include exporters such as Chile, Saudi Arabia and Brazil.

“On the other hand, countries like the Dominican Republic and Mexico that have fewer direct economic ties to China and import commodities may do better, as falling import prices are a boost to their economies.”

There were around 77,000 people in China confirmed with the virus and around 2,600 deaths.