Once one of the poorest and least developed regions of the world, Asian economies have exploded on the international stage in the 21st century to become some of the world’s most dynamic economies. Together with other developing economies, they are viewed by professional investors as an asset class of their own: Emerging Markets (EMs). 

While the Covid-19 pandemic has hurt the global economy; it is hitting EMs especially hard. At the DBS Asian Insights Conference held over July 23 and 24, senior minister Tharman Shamugaratnam warned that the economic pressure of Covid-19 can lead to a very real risk of EM economic gains unravelling. Former International Monetary Fund (IMF) chief economist Raghuram Rajan sees EMs like Mexico, India and Peru losing economic muscle with each passing day. He predicts an incomplete recovery for EMs and fiscal weakness going forward. 

Indeed, the pandemic is both a public issue and an economic struggle for EMs. “Generally, EM countries have fallen behind Developed Markets (DMs) in terms of containing the outbreaks, in terms of flattening their infection curves,” says DBS forex and rates strategist Duncan Tan, with case numbers still climbing in India, Indonesia and the Philippines. 

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