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COVID-19’s reality shock for external-funding dependent emerging economies

Author

Listed:
  • Alicia García-Herrero

    (Chief Economist for Asia Pacific, NATIXIS, Department of Economics & Institute for Emerging Market Studies, Hong Kong University of Science and Technology)

  • Elina Ribakova

    (Deputy Chief Economist at the Institute of International Finance)

Abstract

The spread of COVID-19 and its associated impacts have again brought into focus the dependence of emerging market economies on external financing. This column analyses the factors that put emerging economies at an increased risk of a sudden reduction in dollar liquidity as a consequence of the COVID-19 outbreak. Based on this analysis, it reviews the key tools at the disposal of emerging economies, the Fed, and the IMF to address this problem. It concludes by offering some policy recommendations on the pecking order that could be followed to potentially shield the emerging economies from the dollar shortage problems related to COVID-19.

Suggested Citation

  • Alicia García-Herrero & Elina Ribakova, 2020. "COVID-19’s reality shock for external-funding dependent emerging economies," HKUST IEMS Working Paper Series 2020-73, HKUST Institute for Emerging Market Studies, revised May 2020.
    • Handle: RePEc:hku:wpaper:202073
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    Cited by:

    1. Eric Alexander Sugandi, 2022. "Indonesia’s Financial Markets and Monetary Policy Dynamics Amid the COVID-19 Pandemic," Asia-Pacific Financial Markets, Springer;Japanese Association of Financial Economics and Engineering, vol. 29(3), pages 411-447, September.
    2. Gianluca Benigno & Jon Hartley & Alicia García-Herrero & Alessandro Rebucci & Elina Ribakova, 2020. "Credible Emerging Market Central Banks could embrace Quantitative Easing to fight COVID-19," HKUST IEMS Working Paper Series 2020-75, HKUST Institute for Emerging Market Studies, revised Jun 2020.

    More about this item

    Keywords

    COVID-19; Finance; Financial Regulation; Central Banks; Emerging Economies; IMF; Monetary Policy; Emerging Markets;
    All these keywords.

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