The EBRD, which invests in 38 emerging economies across three continents, has launched an emergency package worth an initial EUR 1 billion to support companies in its countries suffering because of the crisis.
According to the EBRD’s economists, the actual and feared impact of the coronavirus is affecting supply and demand simultaneously. The final economic impact will depend on the duration of the pandemic, as well as policy response by national authorities and governments in key export markets.
Countries are being affected directly by public health measures put in place to fight the virus as well as by precautions taken by individuals.
Containment efforts will lead to lower consumption of services, such as restaurants, recreation, and to some extent transportation. They will also negatively affect household consumption of goods.
Moreover, households may postpone some consumption due to uncertainty created by the pandemic. As demand decreases, many firms, especially SMEs, may experience a sharp decrease in revenues, tightening their liquidity. Overleveraged firms will record higher liquidity constraints, increasing the risk of bankruptcy, EBRD warns.
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