We see the global economy in recession this year, as low oil and financial stress add to the Covid shock. The shock hits EM after years of already subpar growth. We project recessions everywhere in Latin America, and the lowest EM Asia growth since the 1997-98 crisis.

The IIF outlines 5 key policy tools that international economic policymakers should be striving to use, now. No one action can turn the tide against COVID-19, but international coordination will prove crucial to limiting the damage.

Aggressive fiscal stimulus prompts an abrupt rise in sovereign bond yields—and a renewed focus on debt dynamics; Corporate bond funds see sharp outflows of $34bn over the past month, vs. average monthly inflows of $14bn in 2018-19; Amid growing risks for the banking sector, exposure to the energy sector looks relatively limited; The safe-haven rush to USD is a major refinancing risk for EM corporates and sovereigns that rely heavily on FX funding

The focus of this IIF Staff Paper, “Managing Through the COVID-19 Pandemic: How Financial Firms are Responding,” is how the financial services industry has been responding to date to the pandemic with an emphasis on the role of business continuity plans - including measure for possible pandemics. 
 

Russia is more insulated from external shocks than other EMs but not immune. We expect the economy to contract in ‘20, down from our previous forecast of 2%. Its flexible exchange rate puts Russia at a distinct advantage compared to 2014. Most importantly, authorities have ample policy space to address challenges.

The March 2020 IIF Global Regulatory Update provides updates on current work streams. 
 

We see very large capital outflows in our real-time trackers. The shock to flows is already more severe than the global crisis and dwarfs stress episodes such as the Asian crisis of 1997-98. As in past global shocks, we will likely see reserve drawdowns. Current account deficits will shrink as funding becomes scarce.

The March edition of the Insurance Update provides targeted updates on IIF insurance activities and events, and highlights relevant IIF publications or related regulatory developments in other fields.

COVID-19 fears prompt sharp downgrades to corporate earnings estimates; growing risk of fallen angels and fire sales; Signs of stress in corporate funding markets, rising liquidity risk for oil and gas, utilities and across high-yield markets; Biggest vulnerabilities: small and medium sized firms, BBB-rated corporates and EM firms with heavy reliance on FX debt