ECR survey results Q2 2020: Covid-19 crisis increases the economic and political risks for US, Japan, Europe and EMs
The shock resulting from the lockdown measures taken to stop the spread of coronavirus is once again dominating the global risk picture, causing analysts to downgrade key economic factors in second quarter of 2020 and reassess the fiscal implications of the extraordinary state support provided in conjunction with liquidity injections from central banks.
Two factors in particular are affected: the economic outlook-GNP variable, which is downgraded in 127 of the 174 countries since the previous survey was undertaken in Q1 2020, and the employment/unemployment indicator, marked down in 118.
In total 79 countries have seen their total risk scores downgraded since Q1, with sharp falls occurring once again for Argentina and Lebanon, reflecting their ongoing debt-servicing problems, as well as Iran, Iraq, Libya, Syria, and Yemen, which were all high-risk options to begin with.
Czech Republic, Mexico and Sri Lanka are also notable among countries with higher risk profiles, along with a great many sovereign borrowers across sub-Saharan Africa with commodity exposures, tightened access to finance, domestic political problems and a rising tide of foreign debt.
The United States continues to descend into populist turmoil with Donald Trump, seemingly aware of his declining popularity, targeting his base through xenophobic appeals both foreign and domestic
– Dan Graeber, GERM Report
It has been a torrid time too for emerging and