In Quarantined Economics, we outlined the three shockwaves of Covid-19 on the economy, from trade to financial to lockdown. We also estimated the severity of the crisis (GDP, job losses, capital markets, insolvencies), taking into account the mitigating effect of the unprecedented policy response from central banks and treasuries around the world.
The Recovery from Covid-19
Regional Outlook: Asia-Pacific
In Asia-Pacific, we expect aggregate growth to decline to -0.6% in 2020, which means that the Covid-19 shock would be greater than the Asian financial crisis (1998 growth at +0.1%). All of the main economies of the region should experience a technical recession in H1 (except for China and India) as confinement measures are being announced and/or extended. Economies seeing (renewed) outbreaks of Covid-19 and more dependent on global trade and tourism are likely to be hit the hardest, including Hong Kong, Singapore, Thailand, Malaysia and Japan.
APAC 2020 GDP Growth Forecast
China GDP Growth Profile
Regional Outlook: China
In China, our 2020 GDP growth forecast stands at +1.8%, revised down from +4.0% (after +6.1% in 2019). The recovery of the Chinese economy should become more visible in H2, helped by an accommodative policy stance, particularly on the fiscal side. We expect supportive fiscal measures to account for 6.5% of GDP in total in 2020, after 3.3% last year.
Regional Outlook: Emerging Markets
The worst is not over in the emerging world. Economic activity in Emerging Markets has also been choked off by internal and external confinement measures, along with disruptions to supply chains and the dramatic decline in global trade volumes in general. We have therefore revised our forecasts and now expect Emerging Markets GDP to contract by -0.1% in 2020, which is worse than the 2008-2009 Global Financial Crisis (+0.8%).
Global and APAC economic Outlook: May 2020
Françoise Huang
Senior economist for Asia-Pacific
francoise.huang@eulerhermes.com
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