Coronavirus: Asian economies decline despite resumption of business in China
80% of Chinese state-owned enterprises return to work, but national GDP is estimated to drop to 5%. Kickbacks for all major Asian economies, especially Japan and India. Taiwan and South Korea are expected to limit the damage. Indonesia, Singapore and Vietnam are also slowing down.
Beijing (AsiaNews / Agencies) - The Chinese economy is starting up again after the halt to activities caused by the spread of the Wuhan coronavirus (Covid-19), but growth forecasts for the world's second largest economy and its neighbors are revised on the downside.
China is expected to grow to around 5% in 2020 if the epidemic is contained by spring. 80% of its state-owned enterprises and their subsidiaries have resumed operations in the last few days. The reopening concerned in particular the energy, telecommunications and transport sectors. In services, the tourism sector continues to suffer from the country's substantial isolation. At the moment, less than a third of the 291 million migrant workers - citizens who reside in rural areas but who work in an urban center - have returned to work in factories.
The drop in production and demand for consumer goods in China, and the blocking of tourist connections, will have an inevitable negative impact worldwide. Beijing is a cornerstone of the global goods chain, and therefore a driving force for Asian manufacturing economies.
While the forecasts for the first quarter of 2020 are rather gloomy, the recovery of activities in China should favor a recovery in the second half of the year across Asia.
The rating agency Moody’s estimates that India will grow by 5.4% in 2020, a substantial cut compared to the pre-coronavirus projection that gave it 6.8%: the lowest level in the last 11 years. Without an upturn in consumption in the cities and the countryside, and an impetus to the granting of loans to local businesses, the Indian recovery could prove fragile according to analysts.
Estimates for South Korea are more moderate, which should slow down from 2.1% to 1.9%. For Indonesia, however, growth of less than 5% is expected, which contradicts the optimistic declarations of the Jakarta government to be able to exceed the numbers in 2019 (+5.02, the worst figure in the last three years) despite the effects of Covid- 19.
After a 6.3% drop in the last quarter of 2019, the Japanese economy is likely to end in recession in the current year. To cope with the crisis, Tokyo announced a stimulus program worth € 111 billion in December, the effects of which could however be canceled by the contraction due to the epidemic crisis in China.
The Singapore government expects a slowdown to 0.5% from 0.7% last year. But the initial projections for 2020 were growth of up to 2.5%. Local authorities are preparing for new liquidity inputs to stimulate the production system. Vietnam also announced stimuli to achieve its annual growth target (+ 6.8%).
Despite its strong interdependence with the Chinese economy, the decline in Taiwanese growth is expected to be contained in 2020. Taipei estimates it at 2.4%, after a previous forecast of 2.7%. According to the island's authorities, the loos will be less than that experienced during the Sars epidemic of 2002-2003.