Coronavirus could knock USD 211 bn off APAC nations

S&P cut its 2020 growth forecast for China to 4.8 per cent from previous estimate of 5.7 per cent. It forecast Australian growth to slow sharply to 1.2 per cent from an already below-trend 2.2 per cent in 2019. Japan would take 0.5 percentage point hit and Korea a 1 percentage point knock.

“The balance of risks remains to the downside due to local transmission, including in economies with low reported cases, secondary transmissions in China as people return to work and tighter financial conditions,” S&P said in a report.

In other forecasts, Hong Kong’s economy would likely contract by -0.8 per cent in 2020, Singapore’s would flat line, and Thailand’s expansion likely slow to 1.6 per cent.

The coronavirus epidemic, which emanated from China’s Hubei province, has claimed more than 3,000 lives worldwide in less than three months, prompting monetary policy easings in major economies including the US. S&P did not cut growth forecasts for emerging markets of Indonesia, Malaysia, the Philippines and India, citing the fact that reported infections in those countries were still low.

However, it noted the outlook could quickly deteriorate if the low level of cases was due to minimal testing and if those countries were swept up in financial contagion. “We have already had a taster of what can happen with overshooting exchange rates in response to a pick-up in world’s fear gauge,” it said.