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Coronavirus latest: Asia-Pacific faces $211bn economic loss, says S&P

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Via Financial Times

Asia-Pacific faces $211bn economic loss, says S&P

Jamie Smyth reports from Sydney

The spread of the coronavirus will blow a $211bn hole in Asia-Pacific economies in 2020, reducing the region’s annual growth rate to the lowest level since the global financial crisis in 2008, according to S&P Global.

The credit rating agency said a U-shaped recovery should start later this year but warned the outlook for the region has darkened mainly due to the global spread of the coronavirus.

Economic growth is forecast at 4 per cent, down from 4.9 per cent in 2019, and several regional economies will flirt with recession, S&P said.

“Household spending in Japan and Korea are set to weaken further and slower growth in the US and Europe will add to external headwinds,” said Shaun Roache, Asia-Pacific chief economist at S&P Global Ratings.

“China’s return to work is proceeding at a glacial pace as local officials remain cautious about a renewed upturn in infections,” he said.

S&P expects China to grow at just 4.8 per cent this year before rebounding to 6.6 per cent in 2021.

The agency said even a U-shaped recovery would mean an economic loss of about $211bn across the region, which will weaken balance sheets.

Some economic activities will be lost forever, especially for the service sector, said S&P.

Hong Kong, Singapore and Thailand would be among the hardest-hit regional economies, mainly due to the loss of tourism, business travel and supply chain disruptions.

S&P predicts Hong Kong’s economy will contract by 0.8 per cent in 2020, growth will flatline in Singapore and Thailand will expand by just 1.6 per cent.

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Australia is also vulnerable, with growth in 2020 expected to touch 1.2 per cent, S&P added.

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