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NEWS

Asia-Pacific Economic Forecasts: The Cost Of Coronavirus Is Now US$620 Billion.


Asia-Pacific Economic Forecasts: The Cost Of Coronavirus Is Now US$620 Billion.

SINGAPORE (S&P Global Ratings) March 23, 2020--S&P Global Ratings has updated its estimates of the total and permanent income loss for Asia-Pacific from COVID-19: approximately US$620 billion. This loss will be distributed across sovereign, bank, corporate, and household balance sheets.

Our revised forecasts are consistent with the views in "Asia-Pacific Recession Guaranteed," and the global commentary "Global Recession Is Here And Now," both published on Ratings Direct on March 17, 2020. All forecasts remain subject to much higher-than-normal uncertainty.

We have revised our real GDP, inflation, policy rate, and unemployment rate forecasts. We now expect China's GDP growth rate to slow to 2.9% in 2020. Economies will contract in Hong Kong, Singapore, South Korea, and a newly deflationary Japan. The region's average growth rate will be 2.7%.

Table 1

Real GDP Forecast
Actual* Forecast Change from December 2019 Forecast
(%) 2019 2020 2021 2022 2023 2020 2021
Australia 1.8 0.4 4.4 2.6 2.6 (1.8) 2.1
China 6.1 2.9 8.4 5.4 5.3 (2.8) 2.8
Hong Kong (1.2) (1.7) 3.7 2.4 2.3 (1.9) 1.6
India 5.0 5.2 6.9 7.0 7.0 (1.3) (0.1)
Indonesia 5.0 4.1 6.0 5.0 5.0 (1.0) 0.9
Japan 0.8 (1.2) 1.8 0.9 0.8 (1.3) 1.0
Malaysia 4.3 2.7 6.1 4.6 4.5 (1.8) 1.5
New Zealand 2.2 1.0 3.6 2.6 2.5 (1.4) 1.1
Philippines 5.9 4.2 7.5 6.7 6.6 (2.0) 1.1
Singapore 0.7 (0.8) 3.8 2.3 2.2 (2.2) 1.8
South Korea 2.0 (0.6) 5.0 2.5 2.6 (2.7) 2.7
Taiwan 2.7 1.6 2.9 2.3 2.3 (0.8) 0.7
Thailand 2.4 0.5 4.9 3.4 3.4 (2.3) 1.7
Vietnam 7.0 5.0 8.0 6.5 6.2 (1.7) 1.4
Asia Pacific 4.7 2.7 6.7 4.9 4.8 (2.1) 1.8
*2019 figure is an estimate for India. For India, 2019 = fiscal year (FY) 2019 /2020, ending March 31; 2020 = FY 2020 / 21; 2021 = FY 2021 / 22; 2022 = FY 2022 / 23, 2023 = FY 2023 / 24.

Table 2

Inflation
(%) 2019 2020 2021 2022 2023
Australia 1.6 1.3 1.5 2.0 2.2
China 2.9 3.6 1.5 1.7 1.8
Hong Kong 2.9 0.7 1.3 1.8 1.9
India 4.7 4.4 4.2 4.4 4.5
Indonesia 2.8 2.5 3.3 3.2 3.2
Japan 0.5 (0.5) 0.5 1.0 1.2
Malaysia 0.7 1.1 1.6 1.7 2.0
New Zealand 1.6 0.4 1.7 1.8 1.9
Philippines 2.5 1.6 2.9 3.0 3.0
Singapore 0.6 0.3 1.2 1.9 1.8
South Korea 0.4 (0.4) 0.5 1.0 1.5
Taiwan 0.6 0.0 0.6 0.9 1.0
Thailand 0.7 0.4 1.2 1.4 1.5
Vietnam 2.8 3.4 4.0 4.5 4.2
Note: For India, 2019 = fiscal year (FY) 2019 /2020, ending March 31; 2020 = FY 2020 / 21; 2021 = FY 2021 / 22; 2022 = FY 2022 / 23, 2023 = FY 2023 / 24.

Table 3

Policy Rate (Year End)
% 2019 2020 2021 2022 2023
Australia 0.75 0.25 0.25 0.75 1.25
India 5.15 4.50 5.00 5.50 5.50
Indonesia 5.00 4.25 4.50 4.50 4.50
Japan (0.07) (0.07) (0.07) (0.07) (0.07)
Malaysia 3.00 1.75 2.00 2.25 2.50
New Zealand 1.00 0.25 0.25 0.75 1.25
Philippines 4.00 2.75 3.50 4.00 4.00
South Korea 1.25 0.50 0.50 0.75 1.00
Taiwan 1.38 1.13 1.13 1.38 1.38
Thailand 1.25 0.50 0.75 0.75 0.75
Note: For India, 2019 = fiscal year (FY) 2019 /2020, ending March 31; 2020 = FY 2020 / 21; 2021 = FY 2021 / 22; 2022 = FY 2022 / 23, 2023 = FY 2023 / 24.

Table 4

Unemployment Rate
(%) 2019 2020 2021 2022 2023
Australia 5.2 6.1 5.7 5.4 5.2
China 3.6 3.8 3.5 3.7 3.7
Hong Kong 3.0 4.2 4.0 3.5 3.2
Indonesia 5.2 5.4 5.3 5.2 5.1
Japan 2.3 2.7 2.6 2.5 2.4
Malaysia 3.3 3.5 3.5 3.3 3.3
New Zealand 4.1 4.6 4.3 4.1 4.0
Philippines 5.1 6.0 5.2 5.1 5.0
Singapore 2.3 2.7 2.5 2.3 2.2
South Korea 3.8 4.2 4.4 4.2 4.1
Taiwan 3.7 4.1 4.0 3.8 3.7
Thailand 1.0 1.5 1.3 1.2 1.1

S&P Global Ratings acknowledges a high degree of uncertainty about the rate of spread and peak of the coronavirus outbreak. Some government authorities estimate the pandemic will peak in June or August, and we are using this assumption in assessing the economic and credit implications. We believe measures to contain COVID-19 have pushed the global economy into recession and could cause a surge of defaults among nonfinancial corporate borrowers (see "COVID-19 Macroeconomic Update: The Global Recession Is Here And Now" and "COVID-19 Credit Update: The Sudden Economic Stop Will Bring Intense Credit Pressure," published on March 17). As the situation evolves, we will update our assumptions and estimates accordingly.

Related Research

  • Asia Pacific Recession Guaranteed, March 17, 2020
  • COVID-19 Credit Update: The Sudden Economic Stop Will Bring Intense Credit Pressure, March 17, 2020
  • COVID-19 Macroeconomic Update: The Global Recession Is Here And Now, March 17, 2020

This report does not constitute a rating action.

S&P Global Ratings, part of S&P Global Inc. (NYSE: SPGI), is the world's leading provider of independent credit risk research. We publish more than a million credit ratings on debt issued by sovereign, municipal, corporate and financial sector entities. With over 1,400 credit analysts in 26 countries, and more than 150 years' experience of assessing credit risk, we offer a unique combination of global coverage and local insight. Our research and opinions about relative credit risk provide market participants with information that helps to support the growth of transparent, liquid debt markets worldwide.

Asia-Pacific Chief Economist:Shaun Roache, Singapore (65) 6597-6137;
shaun.roache@spglobal.com
Asia-Pacific Economist:Vishrut Rana, Singapore (65) 6216-1008;
vishrut.rana@spglobal.com
Vincent R Conti, Singapore + 65 6216 1188;
vincent.conti@spglobal.com
Media Contacts:Richard J Noonan, Melbourne (61) 3-9631-2152;
richard.noonan@spglobal.com
Chris Davis, Hong Kong (852) 2533-3511;
chris.g.davis@spglobal.com

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