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.”
Nvidia Corp CEO Jensen Huang (黃仁勳) is expected to miss the inauguration of US president-elect Donald Trump on Monday, bucking a trend among high-profile US technology leaders. Huang is visiting East Asia this week, as he typically does around the time of the Lunar New Year, a person familiar with the situation said. He has never previously attended a US presidential inauguration, said the person, who asked not to be identified, because the plans have not been announced. That makes Nvidia an exception among the most valuable technology companies, most of which are sending cofounders or CEOs to the event. That includes
TARIFF TRADE-OFF: Machinery exports to China dropped after Beijing ended its tariff reductions in June, while potential new tariffs fueled ‘front-loaded’ orders to the US The nation’s machinery exports to the US amounted to US$7.19 billion last year, surpassing the US$6.86 billion to China to become the largest export destination for the local machinery industry, the Taiwan Association of Machinery Industry (TAMI, 台灣機械公會) said in a report on Jan. 10. It came as some manufacturers brought forward or “front-loaded” US-bound shipments as required by customers ahead of potential tariffs imposed by the new US administration, the association said. During his campaign, US president-elect Donald Trump threatened tariffs of as high as 60 percent on Chinese goods and 10 percent to 20 percent on imports from other countries.
Taiwanese manufacturers have a chance to play a key role in the humanoid robot supply chain, Tongtai Machine and Tool Co (東台精機) chairman Yen Jui-hsiung (嚴瑞雄) said yesterday. That is because Taiwanese companies are capable of making key parts needed for humanoid robots to move, such as harmonic drives and planetary gearboxes, Yen said. This ability to produce these key elements could help Taiwanese manufacturers “become part of the US supply chain,” he added. Yen made the remarks a day after Nvidia Corp cofounder and chief executive officer Jensen Huang (黃仁勳) said his company and Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) are jointly
MARKET SHIFTS: Exports to the US soared more than 120 percent to almost one quarter, while ASEAN has steadily increased to 18.5 percent on rising tech sales The proportion of Taiwan’s exports directed to China, including Hong Kong, declined by more than 12 percentage points last year compared with its peak in 2020, the Ministry of Finance said on Thursday last week. The decrease reflects the ongoing restructuring of global supply chains, driven by escalating trade tensions between Beijing and Washington. Data compiled by the ministry showed China and Hong Kong accounted for 31.7 percent of Taiwan’s total outbound sales last year, a drop of 12.2 percentage points from a high of 43.9 percent in 2020. In addition to increasing trade conflicts between China and the US, the ministry said
RSS