Emerging Markets Daily - July 20

Rising Dollar Spooks EM Investors, Malnutrition Rises Globally Due to Covid, S. Africa's Third Covid Wave, Nigerian Naira Woes, ASEAN and Vaccines

Jul 20, 2021

The Top 5 Emerging Markets Stories from Global Media - July 20

Rising Dollar Stokes Nerves for Emerging Market Investors
Financial Times
“Investors in emerging markets always keep a close eye on the Fed. Right now, it is making them nervous.”
“Jay Powell, the Federal Reserve chair, has insisted that the US central bank regards the recent surge in consumer price inflation as temporary and will not risk stifling the economic recovery by tightening monetary policy too soon.”
“But the signals are mixed. Hawkish officials on the bank’s Federal Open Market Committee have suggested the Fed should reduce its support to the economy through asset purchases as soon as September and raise interest rates as early as next year.”
“For emerging market investors, this is a game changer.” Jonathan Wheatley reports
More Than a Third of Earth’s Population Faces Malnutrition Due to Covid
Bloomberg
“The economic crisis and food system disruptions from the Covid-19 pandemic will worsen the lack of nutrition in women and children, with the potential to cost the world almost $30 billion in future productivity losses.”
“As many as 3 billion people may be unable to afford a healthy diet due to the pandemic, according to a study published in Nature Food journal. This will exacerbate maternal and child under-nutrition in low- and middle-income countries, causing stunting, wasting, mortality and maternal anemia.”
“…By 2022, pandemic-related disruptions could result in an additional 9.3 million children who weigh too little for their height, 2.6 million who are too short for their age, 168,000 child deaths and 2.1 million maternal anemia cases. This could cause future productivity losses of $29.7 billion, according to the study.” Jasmine Ng reports
Third Covid Wave Upends Fragile South Africa, a Warning for Developing World
The Wall Street Journal
“…Sixteen months ago, Mr. Kgoale lived in a rented two-bedroom house and had a steady cleaning job, while his wife worked in a call center. South Africa’s first wave of Covid-19 infections took the lives of his mother-in-law and grandmother. The second cost him his job and then his home. The third destroyed his efforts to start a new business. ‘I came to Johannesburg 21 years ago from the north, full of hope,’ he said. ‘Now we have nothing left but anger.’”
“Wave after wave of coronavirus is pummeling South Africa’s fragile economy and its largely unvaccinated population, creating a spiral of death, lockdowns and anger that has fueled the country’s worst rioting since the collapse of white minority rule in 1994. At least 215 people died in the violence across South Africa’s two most populous provinces, and more than 3,400 have been arrested. While the looting had quieted by Monday, the situation remains tense in parts of the country.” Gabriele Steinhauser and Joe Parkinson report
Nigerian Businesses Groan as Naira Devaluation Bites Economy
African Business
“…For many businesses and individuals, the naira’s fall has been a heavy burden on their operations and personal lives.”
“Mary Ozolua, a business woman based in Balogun market in central Lagos, said the prices of goods rose immediately the devaluation was announced. She said many business owners now find it difficult to replenish their stocks as prices have surged.”
“…In the aviation sector, airlines, ground handling companies, aircraft maintenance centres and aviation fuel suppliers are committing more naira to source dollars for aircraft spares, aircraft leasing costs, flight crew training, insurance premiums and other obligations.”
“…Many economists have linked the naira crisis to a negative balance of payments in the country.” African Business reports
Delta-hit ASEAN Turns to Vaccine 'Mixing and Matching,' Boosters
Nikkei Asia
“With the advent of COVID-19 vaccines, the hope was that a straightforward two-dose regimen would carry countries toward herd immunity.”
“But faced with myriad issues -- from the spread of the highly transmissible delta variant to supply shortages and doubts over certain vaccines -- authorities around Southeast Asia are rethinking their inoculation strategies.”
“Increasingly, officials are looking at administering third doses to at-risk individuals for an extra layer of protection, and in some cases ‘mixing and matching’ vaccine types.”
“Here is a rundown of what Southeast Asian countries are doing.” Shotaro Tani reports