In the context of COVID-19, international tourism has come to a near halt. This will have a significant impact on activity in many emerging markets. Even under optimistic assumptions, tourism may decline by 60% in 2020. Any recovery will be highly uneven, with Asia and Europe in better positions. High uncertainty is surrounding the outlook given the state of the pandemic.

A recent PBoC survey revealed information regarding Chinese household balance sheets. Chinese households’ net worth is surprisingly large thanks to high savings rates and rising home values. The under-allocation in financial assets means poor liquidity yet great potential for diversification. 

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

We examine currencies in the MENA region with large secondary market discounts, the biggest of which are in Lebanon, Syria, Iran and Sudan. The divergence of official and parallel FX rates in these countries reflects decades of economic mismanagement, public corruption, and international sanctions. 

We analyze the impact of COVID-19 via early activity indicators. Tourism and remittances receipts are key vulnerability drivers. Despite shrinking services surpluses, falling goods imports have kept external pressure contained. Monetary policy has eased markedly, while fiscal space is more limited.