THE NOVEL CORONAVIRUS (2019-nCoV) outbreak is seen to weigh on Asia’s economic growth in the first half of 2020, Fitch Solutions Macro Research said on Wednesday.
The research arm of the Fitch Solutions Group said the Philippines, along with Cambodia and Thailand, are expected to be the most affected as China banned outbound travel of its citizens.
“We at Fitch Solutions see significant downside risks to Asia’s growth outlook, particularly in the first quarter, due to the Severe Acute Respiratory Syndrome (SARS)-like novel coronavirus (2019-nCoV) outbreak in China,” Fitch Solutions said in an analysis of the downside scenarios of the coronavirus on Asian growth.
The death toll from the virus reached 490 in mainland China, as of Tuesday, Reuters reported. The total accumulated number of confirmed infections has reached nearly 25,000, mostly in mainland China.
“Notably, while the WHO (World Health Organization) has established that the coronavirus is more infectious than the 2003 SARS virus, it is currently proving to be less deadly. Nevertheless, over the coming months we believe that the coronavirus epidemic will weigh on Asia’s growth at least in the first half of 2020,” Fitch Solutions said.
If the China’s economy will expand at a slower pace of 5.4% in the first half, Fitch Solutions said the overall expansion of Asia could slow down to 4% this year from 4.3% last year, while the emerging Asia may grow by 5.4% this year, slower than last year’s 5.7% print.
It noted that “disruption in China will dampen regional growth” as China accounts for 70% of emerging Asia’s economic expansion, nearly 80% of Asia-wide travels within the region, and receives 40% of total exports of goods in Asia.
At the same time, Fitch Solutions said the stoppage of outbound travel from China is seen hurting Southeast Asian countries’ tourism sector, particularly Cambodia and Thailand. Chinese tourists made up 27.6% of the 39.7 million tourists to Thailand last year, according to the World Travel & Tourism Council.
“The Chinese government’s strict containment response will likely have a prolonged negative impact on domestic demand and output by businesses, which will spill over into trade momentum,” it said.
Fitch Solutions also flagged the rising risks of a prolonged pandemic spreading across Asia, saying countries with poor health care systems will be most affected.
“Many countries could be vulnerable to disruptive work stoppages and a loss of productivity, as many of them are ill-equipped to address the spread of the virus domestically. We particularly highlight risks to countries that have limited fiscal space with high levels of government debt-to-GDP ratio and less developed health care systems,” it said. — Beatrice M. Laforga