The poorest countries of the world have so far avoided the worst of Covid-19, a result we attribute to a younger population and limited obesity. In the long run, the highest costs may be due to the indirect effects of virus containment policies, especially for girls.

Early in 2020, the general expectation was that the coronavirus pandemic’s effects would be more severe in developing countries than in advanced economies, both on the public health and economic fronts. Preliminary evidence as of July 2020 supports a more optimistic assessment. To date, most low- and middle-income countries have a significantly lower death toll per capita than richer countries, a pattern that can be partially explained by younger population and limited obesity. On the economic front, emerging market and developing economies (EMDEs) have seen massive capital outflows and large price declines for certain commodities, especially oil and non-precious metals, but net capital outflows are in line with earlier commodity price shocks. While there is considerable heterogeneity in how specific countries will be affected in the short and medium run, we are cautiously optimistic that financial markets in the largest EMDEs, especially those not reliant on energy and metal exports, could recover quickly – assuming the disease burden is ultimately not as dire in these countries. In the long run, the highest costs may be due to the indirect effects of virus containment policies on poverty, health and education as well as the effects of accelerating deglobalization on EMDEs. An important caveat is that there is still considerable uncertainty about the future course of the pandemic and the consequences of new waves of infections.

This paper is part of the Summer 2020 special edition of the Brookings Papers on Economic Activity.