April 2020 Geopolitical Event Watch

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K.P. O'Reilly PhD, JD

K.P. O'Reilly PhD, JD

April 2020 Geopolitical Event Watch

March 30, 2020

Coronavirus forces a new normal. Events across the globe were interrupted and delayed by the rapid spread of the novel coronavirus (covid-19). Having attained pandemic status by the World Health Organization, covid-19 is wreaking havoc with the global economy. During March, the number of reported cases and deaths more than doubled globally as the virus epicenter moved from China to Europe and the U.S.

Flattening the curve. Limiting the spread of the virus has introduced new phrases of “social distancing” and “flattening the curve” into the daily discourse (See Figure 1). Approximately 2 billion individuals worldwide are now under some sort of mandated quarantine following India’s 21-day national shutdown on March 24. These efforts have ground economic activities in affected countries to a virtual halt. Globally, central banks have acted to ease liquidity concerns as companies and investors scramble for cash (i.e., U.S. dollars). Meanwhile, governments are delivering significant fiscal stimulus packages. The U.S. government is readying a stimulus package to aid affected workers and businesses of nearly $2 trillion, almost 10% of GDP. Nevertheless, the likelihood of social distancing measures until May or June makes economic projections problematic.

Are Emerging Markets Ready for Covid-19? Concerning is growing that the next wave will occur among emerging market countries. As in the case of the developed markets, emerging market countries are failing to coordinate action to contain and slow the spread of covid-19. Many of these countries lack the institutional capabilities to cope with the public health and economic fallout of the virus simultaneously. For Instance, across Latin America, the rise in diagnosed cases (>7,400) has provoked uneven responses from governments in the region. Argentina, Bolivia, Chile, and Peru implemented various lockdown efforts. Mexico and Brazil have taken far less aggressive action as both governments are hoping to avoid the negative economic impacts of national shutdowns, but risk surges in infections that will stress public health infrastructures and necessitate costly fiscal stimulus which neither country is well-positioned to handle. Regionally, many countries will face changes to government and public health institutions (See Figure 2).

 

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2020-04-30T08:30:17+00:00 By |