The more a country is intertwined with the global economy — whether through industry, trade or tourism — the greater the potential damage from the COVID-19 pandemic. Germany and other rich countries have tried to mitigate this damage with the help of huge aid and economic stimulus packages.   

But emerging economies worldwide are mostly not in a position to mobilize the same amount of resources. “They lack the resources,” said Klaus-Jürgen Gern, an expert on business cycles and growth at the Kiel Institute for the World Economy (IfW). “Measured against overall economic output, their government revenues are usually lower. They also cannot borrow on the international capital markets to the same extent as the industrialized countries.”

Fear is on the rise

As the COVID-19 pandemic spread in spring 2020, many feared a major economic catastrophe. But it has so far failed to materialize. At that time, investors withdrew their…

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