Chennai, Feb 2 (Ajit Weekly News) China’s relaxation of its zero Covid-19 policy will benefit emerging markets (EM) that are exposed to China’s consumption, said S&P Global Ratings in a report.
According to S&P Global Ratings, EMs that are large recipients of Chinese tourists could benefit significantly as travel picks up after a couple years of virtually no outbound Chinese tourism. These include Thailand and Vietnam.
EMs that typically benefit from greater demand for infrastructure-heavy industrial metals, such as South Africa, Brazil, Chile, and Peru, may see terms of trade improvements if the recent increase in commodity prices is sustained, the report said.
However, the benefits to growth in those EMs will not materialise until China’s property market recovers more decisively and results in greater export volumes of metals, or prices remain high for a sustained period to fuel income growth.
Greater mobility in China reduces the risk of port or manufacturing disruptions, which could be positive for EMs with significant manufacturing linkages with China. However, weakening demand in advanced economies, they key buyers of manufactured goods, is likely to prevent those benefits from fully materialising.
–Ajit Weekly News
News Credits – I A N S