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The new coronavirus could dampen emerging markets

Stefan Heunis/AFP via Getty Images

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There are a lot of unknowns with COVID-19, but it definitely isn’t good for the global economy. On Monday, oil markets crashed more than 30%, 10-year Treasury yields dipped below 0.4% and the Stoxx Europe 600 Index fell the most since 2016.

Ian Bremmer, founder of the political risk consultancy Eurasia Group, said this upheaval could be especially challenging for less-industrialized countries.

“The global economy was already softening. A lot of big investors weren’t looking to put more cash in emerging markets. And now those countries look scarier,” Bremmer said in an interview with Marketplace’s David Brancaccio.

“Especially if this coronavirus plays out in their own countries with outbreaks — nevermind the problems of supply chain and global slowdown — they’re the ones that are going to get hurt the most.”

But there could be a silver lining for some countries as companies look to diversify their supply chain in the future.

“One thing that you are going to see is a tipping point towards globalization and regionalization. Suddenly companies are finding that having awful lots of labor in China makes them really vulnerable to disruption,” Bremmer said.

Click the audio player above to hear the full interview.

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