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Emerging Markets Daily - April 27
India's Terrifying Covid Surge, Brazil Middle Class Reels, China Digital Economy Surges, Chinese-Founded Social Network Rises in MENA, Major Africa Setbacks on Slow Vaccine Rollout, and more...
The Top 5 Emerging Market Stories from Global Media - April 27
If You Aren’t Terrified About What’s Happening in India, You Should Be
The China Africa Project
“With 350,000 infections a day, which is probably just a fraction of the actual number, and the emergence of far more deadly ‘double mutant’ variants, the latest outbreak in India appears to be the beginning of a new, more dangerous phase in the pandemic.”
“The collapse of India’s healthcare system and critical shortages of vaccines and other medical supplies mean there’s no effective barrier to stop or even slow the spread of the virus.”
“…Even Vietnam, a country that’s handled the pandemic better than almost anyone else to date, is now saying that it’s ‘very anxious’ about what’s happening.”
“…The South African variant, B.1.351, is proving to be particularly vexing for Pfizer, Sinopharm, and Sinovac vaccines, highlighting how the virus appears to be evolving at a terrifyingly rapid pace. Now, with the emergence of ‘double mutants,’ there’s even more reason to be concerned.” Eric Olander reports
Brazil Middle Class Hit Hard by Pandemic, Many Falling into Poverty
Folha de Sao Paolo
“Brazil's so-called class C is being pushed quickly back to classes D and E. This is the biggest novelty of the Brazilian economic landscape at the beginning of this century.”
“People in class C find themselves headed to poverty due to the consequences of Covid-19 and the disorganization of the Jair Bolsonaro government's pandemic mitigation policies.”
Note from Emerging World: Brazil economists, policy-makers and others use a class system as defined by The Brazilian Institute for Geography and Statistics, known as Instituto Brasileiro de Geografia e Estatística or simply IBGE in Portuguese. This article from the Brazil Business lays out the system. An excerpt below:
Classs A: composed of bankers, investors, business owners, major landowners and people with extraordinary skills for the industry they operate in
Class B: composed of directors and managers, judges, prosecutors, highly educated professors, doctors, well qualified engineers, lawyers, etc
Class C: composed of those who provide services directly to the wealthier groups, such as teachers, managers, mechanics, electricians, nurses, etc
Class D: composed of people who provide services to Class C, such as housemaids, bartenders, bricklayers, people who work for civil construction companies, small store owners, low-paid drivers, etc
Class E: composed of people who earn minimum salaries, such as cleaners, street sweepers and also unemployed people
“Research from different agencies reveals not only that tens of millions of Brazilians are going back to more precarious situations since last year but that their lives may continue to get worse in 2021.”
“While the more privileged classes are beginning to stabilize income or make gains, classes D and E are likely to experience another drop of almost 15% in their income this year. This will not only increase Brazilian social inequality, but will slow economic recovery.”
“The gigantic low-income population will consume less, which will require less investment and less hiring of new employees by the productive sector.” Fernando Canzian reports.
China’s Digital Economy surges to Nearly 40% of Country’s GDP
South China Morning Post
“China’s digital economy made up nearly 40 per cent of the country’s gross domestic product in 2020, as consumers and businesses moved many of their daily activities online amid the disruptions caused by the coronavirus pandemic…”
“The digital economy grew by 9.7 per cent last year, more than triple the growth rate of the country’s GDP in the same period, according to the white paper. CAICT said this segment of the economy includes electronics manufacturing, telecommunications, internet and software services, as well as the so-called value-added from the application of digital technologies in traditional businesses.”
“This segment of the country’s economy includes electronics manufacturing, telecommunications, internet and software services.” Yujie Xue reports
Chinese-Founded Social Network Yalla is Rising Star in Middle East
“Yalla, or ‘Let’s go’ in Arabic, saw the monthly users of its chat app and its games app increase by nearly fivefold to more than 12m in the year to last June, and its share price has more than tripled since an IPO in New York last October.”
“The company has localised so well, with headquarters in Dubai, that many users are unaware that its engineering team and founders are all in Hangzhou, near Shanghai — a rare example of a successful Chinese-foreign hybrid tech company.”
“Yang said he came up with the idea while travelling around the region, from Egypt to Afghanistan, and noticing how much time people spent talking on the phone. He decided to build a social network based around chatting, rather than typing, and today each user spends an average of five hours in the app, much of it not actively talking, but hanging out or listening, akin to having a radio on in the background.” Yuan Yang and Simeon Kerr report
Vaccine Troubles May Set Africa Back Five Years, UN Body Says
“A slow rollout of Covid-19 vaccines and a lack of funding to bridge the gap between poor and rich countries could set Africa back two to five years, according to the head of the United Nations Economic Commission for Africa.
“The fact that Africa isn’t going to get vaccinated as fast is going to clearly slow growth,” Vera Songwe, the executive secretary of the UNECA, said Monday in an interview. A lack of access to vaccines that will keep barriers to travel and business in place will also slow trade and hamper investments that could set back economic growth and prevent the creation of 26 million jobs, she said.” Prinesha Naidoo and Jess Shankleman report
What We’re Also Reading….
For Coveted Spots in China, Uzbek Students ‘Study Like Crazy’
“Uzbekistan’s hardest-working students see China as a promising alternative to America and Europe. They often learn about opportunities on social media.”
“Their interest reflects rapidly growing economic ties with China. For the past five years, China has been Uzbekistan’s largest trading partner; more than 1,600 Chinese businesses have opened since independence.”
“Traveling abroad for an education is nothing new for Uzbeks, said Timur Kocaoglu, an Uzbek-American professor of international relations at Michigan State University. Kocaoglu likens today’s students to the early 20th century reformist Jadids, who emphasized education as a way to modernize the Muslim world.” Ezoza Yakvalkhodjieva reports
HSBC Quarterly Profit More Than Doubles Amid Global Recovery
Wall Street Journal
“Global banking giant HSBC HoldingsPLC said quarterly net profit more than doubled, as a nascent economic recovery allowed it to free up funds previously set aside to offset potential pandemic-related losses.”
“The London-based lender, which makes most of its profit in Hong Kong and mainland China, earned a forecast-beating $3.88 billion in the first three months of the year, up from $1.79 billion in the same period last year.”
“‘The economic outlook has improved, giving us increasing confidence in our revenue growth plans,’ the bank said Tuesday. The lender’s global banking and markets business had a good quarter, HSBC said, while growth was solid in areas like wealth management and trade finance in Asia, and in U.K. and Hong Kong mortgages.”
“HSBC reduced provisions for bad loans by $435 million in the quarter, which it said was mostly due to a brighter economic outlook. It had taken more than $3 billion of new provisions in the same period last year.” Simon Clark and Quentin Webb report.
Lebanon Launches First Electric Car
“A Lebanon-made electric car made its debut on Saturday, the first time the Mediterranean country has manufactured an automobile, despite struggling amid a dire economic crisis with frequent power cuts.”
“The red sports car with butterfly doors — named ‘Quds Rise’, using the Arabic name of Jerusalem — is the project of Lebanese-born Palestinian businessman Jihad Mohammad.”
“It is the ‘first automobile to be made locally’, Mohammad told reporters, at the unveiling in a parking lot south of Beirut. It was built in Lebanon ‘from start to finish’, he said of the prototype, emblazoned at the front with a golden logo of the Dome of the Rock, the shrine in Jerusalem's Al Aqsa Mosque compound, Islam's third holiest site.”
“The car is to cost $30,000. Production of up to 10,000 vehicles is hoped to start later this year in Lebanon, with cars to hit the market in a year's time, said Mohammad, the director of Lebanon-based firm EV Electra.” Jordan Times/AFP report.
In Nepal, Hotels Reel As Bookings Crater Amid Covid Second Wave
“The second wave of the coronavirus pandemic has again hit the gradually recovering hotel industry. As the COVID-19 cases are steadily rising each passing day in the country, hotels have started witnessing booking cancellations.”
“The number of foreigners arriving into the country as well as domestic tourists travelling to various local destinations had started increasing with the onset of the spring season. However, due to the increasing cases of COVID-19 infection, the hotel rooms are being cancelled, as stated by the Hotel Association Nepal (HAN).”
“According to HAN, tourist standard hotels as well as star-rated hotels and resorts in tourist hubs like Pokhara, Chitwan, Dhulikhel, Nagarkot, Mustang, not to mention Kathmandu valley, are receiving cancellations of pre-bookings. "Almost all the hotels in tourist destinations of the country are receiving cancelations of room bookings," said Sajan Shakya, general secretary of HAN.”
“With the coronavirus cases on the rise, local governments of some districts have already imposed lockdowns to contain the infection, while the federal government has also issued safety protocols.” Himalayan Times reports.