The gross domestic products (GDPs) of Asias top economies are expected to weather coronavirus more effectively than those in the West, according to a report by an international development organization.
The Organisation for Economic Co-operation and Development (OECD) on Wednesday said GDPs of Asia’s G20 economies would have smaller declines year-on-year than those in the West, Efe news reported.
“In 2020, Japan is on course to experience its deepest recession of the post-war era, with, at the best, a modest recovery in 2021,” it said. “Its GDP is expected to decline 6 per cent in 2020 in the single-hit scenario and 7.25 per cent in the double-hit scenario.”
While alarming, such a figure – along with those of the rest of Asia’s G20 countries – remains below the world average of -7.5 per cent, with the worst-case double-hit scenario leaving India down 7.25 per cent, Indonesia 3.9 per cent, China 3.7 per cent and South Korea 2.5 per cent, the report read.
South Korea has the lowest forecast GDP decline among OECD economies, in part due to the rapid response of authorities to the initial outbreak.
South Korea, one of the first nations to register coronavirus cases, employed a strict tracking system to find and isolate suspected contagion, which limited the economic consequences. Investment is expected to decline and the recession will result in lower exports, which, the report says, have suffered a notable collapse.
Its fortunes, however, are better than Japan, which has suffered its greatest peacetime economic downturn. The business sentiment has been affected. With unemployment rising and inflation turning negative, the recovery of its hardest-hit sectors — tourism, accommodation and restaurants — looks bleak, says the report.
China, which reported the first coronavirus cases and saw the greatest initial economic effect, was able to stabilise after rigid isolation protocols in Wuhan, the city whose wet market is linked to the disease’s origin. The report says lockdown and containment measures allowed the country to avoid a disastrous scenario at its main financial hubs.
Asia’s largest economy registered its first contraction, since it began to keep records in the early 1990s. A second wave of infections, says the report, could be much less disruptive than the first wave.
China’s ability to resist a second wave is in stark contrast to that of India’s, which, the report says, would be the most affected by a resurgence of the virus in terms of GDP contraction. The forecast for the Asian giant is 3.7 per cent YoY decline in GDP. In case of a double-hit, the predicted contraction is 7.4 per cent.
Because of India’s administrative structure, the only way to contain the virus would be another 10-week lockdown, which would cause similar effects with the multitude of informal sector workers suffering the greatest economic consequences.
According to the report, coronavirus exposed Indonesia’s shortcomings in the healthcare sector. In Indonesia, around 80 per cent population is covered by the health care system. But poor medical infrastructure in rural areas as well as the underdeveloped unemployment assistance scheme prevented its most vulnerable workers from contributing to the economy, says the report.