Asia will forever be known as the origin of the coronavirus pandemic, which has spread rapidly across the globe and caused an estimated 583,892 deaths from 13,530,628 reported cases (as of July 16th).
This means that nations such as China and others in Asia were the first to implement and subsequently lift its lockdown measures, meaning that they’ve blazed something of a trail for others to follow in terms of socio-economic impact and recovery.
But how exactly has Covid-19 impacted on the Asia-Pacific region, and what does the road to recovery look like in the near and longer term.
The Impact of Covid-19 on the Asian Economy
Following the initial lockdown in Wuhan, China (where the outbreak first originated), it was thought that 80% of all local employees were impacted by the lockdown measures.
This has had a dramatic impact on businesses in Wuhan and indeed throughout China, as economic productivity stalled considerably throughout the first quarter. While this trend has gradually begun to reverse during the second quarter, it’s currently estimated that China’s total GDP will decline by approximately 8.5% by the end of 2020.
This is largely being underpinned by a vast reduction in consumer spending, as individual households have been hit particularly hard by job losses and business closures nationwide.
This trend has been replicated throughout the whole of Asia, thanks primarily to the level of supply chain reliance that exists between China and many neighbouring countries. In this respect, Hong Kong, Thailand and Malaysia have been particularly affected, with the Asian region’s growth forecast for 2020 revised from 4.3% to just 3.8% since March.
Of course, the trend has also been exacerbated by the ascent of the Covid-19 outbreak into a truly global pandemic, with the production capacity in the world’s manufacturing capital having been negatively impacted by school closures and subsequent childcare issues.
This was also borne out by the outsourcing of production from China to nations such as Turkey, which took a huge chunk out of the economy in a short space of time.
The Long Road to Recovery
Fortunately, the road to recovery has already begun, and in this respect, the Asian market has been helped by its diverse range of growth markets.
For example, the decline in consumer spending impacted on travel and tourism particularly hard, while passenger volumes on Japanese trains declined by 50% during Q1 of 2020 alone. At the same time, Singapore and Asia remain prominent hubs for international supply chains, and this has impacted negatively on global exports and currency values.
However, other sectors have been far more resilient, particularly food (groceries), household services and IT, and this has allowed economies to refocus and remodel their efforts in a bid to optimise short-term growth.
For countries like Vietnam that rely on tourism, the government has also taken direct action by investing in local facilities and employment in a bid to drive a higher demand for domestic travel.
This type of proactive thinking, when allied with ongoing control measures such as wearing masks and promoting the importance of social distancing, can help Asia to continue its extended recovery from Covid-19 while simultaneously minimising the risk of further outbreaks.
About Author: Ed Smith