Asia-Pacific faces $211bn economic loss, says S&P
Jamie Smyth reports from Sydney
The spread of the coronavirus will blow a $211bn hole in Asia-Pacific economies in 2020, reducing the region’s annual growth rate to the lowest level since the global financial crisis in 2008, according to S&P Global.
The credit rating agency said a U-shaped recovery should start later this year but warned the outlook for the region has darkened mainly due to the global spread of the coronavirus.
Economic growth is forecast at 4 per cent, down from 4.9 per cent in 2019, and several regional economies will flirt with recession, S&P said.
“Household spending in Japan and Korea are set to weaken further and slower growth in the US and Europe will add to external headwinds,” said Shaun Roache, Asia-Pacific chief economist at S&P Global Ratings.
“China’s return to work is proceeding at a glacial pace as local officials remain cautious about a renewed upturn in infections,” he said.
S&P expects China to grow at just 4.8 per cent this year before rebounding to 6.6 per cent in 2021.
The agency said even a U-shaped recovery would mean an economic loss of about $211bn across the region, which will weaken balance sheets.
Some economic activities will be lost forever, especially for the service sector, said S&P.
Hong Kong, Singapore and Thailand would be among the hardest-hit regional economies, mainly due to the loss of tourism, business travel and supply chain disruptions.
S&P predicts Hong Kong’s economy will contract by 0.8 per cent in 2020, growth will flatline in Singapore and Thailand will expand by just 1.6 per cent.
Australia is also vulnerable, with growth in 2020 expected to touch 1.2 per cent, S&P added.