Johannesburg – Ratings agency Fitch on Thursday warned that the recovery of emerging markets s=countries might lag behind the Covid-19 pandemic as their macro policy response has been less aggressive.
Fitch said South Africa, along with Brazil and Poland, made the largest fiscal policy responses to the crisis among emerging market economies. Over 25 emerging economy countries have relied heavily on the International Monetary Fund’s Rapid Financial Instrument as the pandemic took a toll on economic activity and gross domestic product (GDP).
Marina Stefani who is a director at Fitch said one common feature of the response of the emerging market was widespread interest rate cuts, with a sharp reduction in Turkey, South Africa, Brazil, India, and Mexico.
“Responses to the crisis have been strikingly uneven, with developed-market countries within the Fitch 20 set to spend an aggregate $7.6 trillion (R187 billion) or 11% of 2019 GDP in overall fiscal support measures, while emerging market economies have announced a modest $1.2 trillion or 1.8% of 2019 GDP,” said Stefani
“South Africa’s fiscal support accounts for 7.3% of GDP, although 54% of the stimulus will be in the form of credit guarantees to support SMEs,” Stefani added.
