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Economic outlook: Frontier markets yet to feel impact of Covid-19 – commodity markets could see long term changes


24 April

Frontier markets are lagging behind Western Europe and North America in terms of feeling the effects of Covid-19, according to Fitch Ratings.

Prior to the pandemic countries such as Armenia, Azerbaijan, Belarus, Jamaica, Mongolia, Sri Lanka and Tunisia were seeing declining unemployment.

However, weakening local currency exchange rates against the dollar are the first sign of challenges ahead for these countries.

The World Bank has reported on the impact of economic shutdowns on commodity markets Agriculture, metals and – most dramatically – energy commodity prices have all taken a dip in recent weeks.

The World Bank says in its Commodity Markets Outlook: “The impact of the Covid-19 pandemic on commodity markets more broadly may result in longer-term changes.

“Transport costs may be higher due to additional border-crossing requirements. Higher trade costs will in particular affect agriculture and food commodities and textiles.

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“Decisions to stockpile certain commodities could affect trade flows and have an effect on global prices.”

Meanwhile, the BCG Henderson Institute has share some strategy lessons for how business leaders can navigate the current crisis.

“When the economic environment gets challenging, companies tend to act defensively. However, 14% of companies across sectors increase both growth and margins during downturns. As a result, competitive divergence increases during recessions.

“The companies that emerge stronger from a downturn tend to take a long-term perspective and treat the crisis as an opportunity.

“Benchmarking suggests that while the majority of companies are focused on reacting to and managing the current crisis, some are seeing and executing against emerging longer term opportunities.”

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