The damage from the COVID-19 pandemic to economies in the Asia-Pacific region could reach US$2 trillion through next year, S&P Global Ratings said on Friday, as the coronavirus persists and the recovery of business conditions to pre-pandemic levels looks some way off.
The implementation of social distancing and other containment measures would continue in a bid to mitigate the effects of the outbreak until an effective vaccine is developed, but such practices will likely cause income losses for households and businesses, it said.
“As the COVID-19 pandemic endures, we are learning more about its human, economic and financial costs,” S&P Global Ratings Asia-Pacific chief economist Shaun Roache said in a statement. “The next lesson will be about the cost of transition between lockdown and vaccine.”
Photo: Chen Hsin-yu, Taipei Times
Economies in the region would enter a transition period until the middle of next year, during which social distancing measures would pervade in everyday life, although such constraints might differ by country and could be relaxed or tightened from time to time depending on the epidemic situation, the ratings agency said.
“Economic policies can limit some of the damage during first-wave containment, support the partial recovery through transition, and provide a bridge to the self-sustaining recovery that takes hold in late 2021. However, the costs continue to compound,” it added.
Based on S&P’s estimate, economic growth across the region would slow to 0.3 percent this year, which compares with 4.8 percent growth the agency forecast prior to the pandemic and marks the lowest since the 1.3 percent growth during the Asian financial crisis in 1997.
The IMF last week said that economic growth in the region will likely slow to a standstill this year, which has not happened in the past 60 years.
S&P said that Taiwan’s economy would shrink by 1.2 percent this year, down from its previous estimate of 1.9 percent expansion.
The ratings agency said it expects China’s economy to grow 1.2 percent, down from the 2.9 percent growth it projected earlier.
The agency cut its growth forecast for India from 3.5 percent to 1.8 percent and expects Japan’s economy to contract by 3.6 percent, compared with a decline of 1.2 percent it predicted earlier.
Governments in the region are facing imminent challenges, such as unemployment, from the pandemic, which would cause consumers to become more frugal, increase pressure on more leveraged households and take a toll on the broader economy, S&P said.
“From an economics perspective, the main risk now is unemployment,” Roache said. “Jobs are easily lost, but hard to win back and a surge in unemployment, say by more than 4 percentage points across the region, would mean a much flatter recovery path.”
When an apartment comes up for rent in Germany’s big cities, hundreds of prospective tenants often queue down the street to view it, but the acute shortage of affordable housing is getting scant attention ahead of today’s snap general election. “Housing is one of the main problems for people, but nobody talks about it, nobody takes it seriously,” said Andreas Ibel, president of Build Europe, an association representing housing developers. Migration and the sluggish economy top the list of voters’ concerns, but analysts say housing policy fails to break through as returns on investment take time to register, making the
‘SILVER LINING’: Although the news caused TSMC to fall on the local market, an analyst said that as tariffs are not set to go into effect until April, there is still time for negotiations US President Donald Trump on Tuesday said that he would likely impose tariffs on semiconductor, automobile and pharmaceutical imports of about 25 percent, with an announcement coming as soon as April 2 in a move that would represent a dramatic widening of the US leader’s trade war. “I probably will tell you that on April 2, but it’ll be in the neighborhood of 25 percent,” Trump told reporters at his Mar-a-Lago club when asked about his plan for auto tariffs. Asked about similar levies on pharmaceutical drugs and semiconductors, the president said that “it’ll be 25 percent and higher, and it’ll
NOT TO WORRY: Some people are concerned funds might continue moving out of the country, but the central bank said financial account outflows are not unusual in Taiwan Taiwan’s outbound investments hit a new high last year due to investments made by contract chipmaker Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) and other major manufacturers to boost global expansion, the central bank said on Thursday. The net increase in outbound investments last year reached a record US$21.05 billion, while the net increase in outbound investments by Taiwanese residents reached a record US$31.98 billion, central bank data showed. Chen Fei-wen (陳斐紋), deputy director of the central bank’s Department of Economic Research, said the increase was largely due to TSMC’s efforts to expand production in the US and Japan. Investments by Vanguard International
WARNING SHOT: The US president has threatened to impose 25 percent tariffs on all imported vehicles, and similar or higher duties on pharmaceuticals and semiconductors US President Donald Trump on Wednesday suggested that a trade deal with China was “possible” — a key target in the US leader’s tariffs policy. The US in 2020 had already agreed to “a great trade deal with China” and a new deal was “possible,” Trump said. Trump said he expected Chinese President Xi Jinping (習近平) to visit the US, without giving a timeline for his trip. Trump also said that he was talking to China about TikTok, as the US seeks to broker a sale of the popular app owned by Chinese firm ByteDance Ltd (字節跳動). Trump last week said that he had
RSS