Image Source: Anastasiia Chepinska
COVID-19 that has threatened lives around the world since March 2020 presents an unprecedented threat to both human health and prosperity in countries in the Asia Pacific region. All countries in the Asia Pacific region make the Covid-19 outbreak a major concern after seeing the impact of the disease on humans.
Apart from having an impact on health, the outbreak is also having an economic impact at an unprecedented scale and speed. The impact that occurs is very broad and affects economic growth, for example, many companies go bankrupt, causing many impacts.
The COVID-19 outbreak has left economic policymakers around the world facing very different challenges. The impact of COVID-19 has changed the logistics supply chain focused on Asia now continuing to disrupt the rest of the world. Many countries have locked down both in their domestic territory and traffic in and out of transnational citizens.
The economy is expected, when the outbreak mostly hit the Asian region in January and February, showing a decline in world GDP growth of around 0.2%. And because the virus has spread around the world, lockdowns and starts to happen a lot, it is likely that we will see the sharpest in history, in the fourth quarter of 2021, after the new Covid-19 variant begins to attack Asia Pacific.
Economic Impact of COVID-19 in Asia Pacific
For businesses in the Asia Pacific region, they have the principle that uncertainty is a fact and a more severe scenario will prolong the recession if it is not managed. The world economy will
There is a contraction of 8% in 2021, and the Chinese economy by 5.9%.
START FROM SLOWDOWN TO LOCKDOWN
BEGINNING STEPS TO 2021
Before the outbreak of the coronavirus and spread throughout China, Asia and the world then, the global economic assessment will enter 2021 naturally with a solid footing. Business investment continues to normalize against the backdrop of a resurgent US-China trade war. This is supported by persistently strong labor markets around the world. A large labor market will help provide real income gains for households. According to forecasts, in the fourth quarter of 2021, the world economy will grow by 2.5%.
Promised predictions for 2021 were soon undermined by the rapid spread of COVID-19. The outbreak of COVID-19 has had a major economic impact through disruptions to the logistics supply chain, impacting financial markets.
The economic impact of COVID-19 has severely dampened EAP’s growth. This greatly hinders poverty alleviation efforts. The slowdown in the region has been exacerbated by a decline in economic activity in China. China’s GDP shrank 6.8% yoy in Q1 2020, the sharpest contraction since the first quarter of 1976. According to the World Bank, China’s GDP is expected to reach 2.3% in 2020 from 6.1% in 2019.
Measures to prevent the transmission of the virus have been carried out significantly through a reduction in economic activity. One that makes is the collapse of the tourism sector, and other retail sectors. EAP growth expanded, excluding China, to 1.3% in 2021 from 4.7% in 2020.
Many of the economies in the EAP (Cambodia, Thailand, the Philippines and some Pacific countries) heavily impact tourism as a major source of income, export earnings and job creation, making them particularly vulnerable to a tourism downturn. the region is also highly open to trade and investment and linked to global value chains.
IMPACT OF THE PANDEMIC ON THE RETAIL SECTOR
Some sectors of the economy that depend on manufacturing (Cambodia, Malaysia, Thailand and Vietnam), are vulnerable to supply disruptions as they often face imports of goods for their exports. Countries that specialize in these commodities will be greatly affected by the reduction in global demand.
This pandemic also caused a sudden tightening of global funding in the Asia Pacific region and had a significant impact on economic conditions. The pandemic has also impacted EAP economies with high debt levels (Lao PDR, Malaysia, Mongolia, Vietnam), large fiscal deficits (Cambodia, Laos, Vietnam), and dependence on volatile capital flows in Cambodia, Indonesia). In addition, price pressures will affect regional commodity exporters (Malaysia, Mongolia, Myanmar and Indonesia); while regional oil importers will benefit from lower oil prices.