A new report is warning APAC risk managers a prolonged outbreak will cause significant second-round effects, including severe supply chain disruption
Experts have warned the APAC market to expect a ”severe but short-lived economic impact” from the coronoavirus, with a lowered China growth forecast to 5.2% for 2020.
In a new report ratings agency, Moody’s , has warned of ongoing disruption from the deadly epidemic: “Regional impact will be felt through trade and tourism, and for some sectors through supply-chain disruptions. This shock comes on the back of a marked slowdown in 2019 as decelerating global trade hit the region.”
The report also warns Macao and Hong Kong face biggest hit given economic integration with China.
Forecast revisions also incorporate updated views unrelated to coronavirus outbreak, including weaker domestic demand in India and Thailand, as well as expectations of policy offsets.
Other keys messages include:
- Outbreak will cause disruption in Q1 economic activity. Our baseline assumption is that the economic effects of the coronavirus outbreak will continue for a number of weeks before they tail off and normal economic activity resumes
- Marked economic exposure for those most dependent on Chinese demand. Growth across countries in Asia Pacific (APAC) will slow to varying degrees, dependent on economic exposure to China
- Prolonged outbreak will cause significant second-round effects, including severe supply chain disruption. Goods and commodity exporters are significantly exposed to a protracted fall in Chinese demand
- Services trade adds another channel of transmission. Tourism hubs that rely on Chinese visitors, predominantly in APAC, will be vulnerable to the negative impact of the outbreak