Snow falls as people wearing face masks walk through the Asakusa district on March 29, 2020 in Tokyo, Japan.
Tomohiro Ohsumi | Getty Images
SINGAPORE – As 2020 draws to a close, many investors consider Asia to be the region with one of the best economic prospects next year thanks to its relatively better control of coronavirus outbreak.
But a recent rise in Covid cases in some countries threatens to dampen the region’s economic prospects, some analysts have warned.
“For some of Asia’s giants, it’s likely that this year’s Covid-19 accidents will not get better when the clock hits 12 on New Year’s Eve,” said research firm Pantheon Macroeconomics.
To be sure, daily reported cases in many parts of Asia – where the virus was first affected – remain lower compared to those in Europe and the US, data collected by Johns Hopkins University show.
But some countries are now struggling with a resurgence far worse than what they experienced earlier in the pandemic. Even territories that had great success with containing the virus may not be spared Taiwan reported this week on its first locally transmitted case since April 12 – underscores the difficulty of eradicating Covid.
Here’s a look at the Asian economies struggling with a renewed rise in coronavirus infections and how it will affect their economic prospects.
- Covid-19: 207,007 cumulative confirmed cases and 2,941 deaths as of Wednesday, according to Hopkins data.
The number of daily reported coronavirus infections in Japan began to rise again in November and last week exceeded 3,000 for the first time, Hopkins data show.
Medical groups in the country warned that the health system is coming under significant strain from the pandemic, according to Reuters. But Japanese Prime Minister Yoshihide Suga has refrained from declaring a state of national emergency – even though he said he would suspend a travel grant program to slow the spread of coronavirus, the news agency reported.
Economists from the Pantheon Macroeconomics wrote in a Wednesday report that the Japanese government’s “relatively soft” social distancing rules do not seem to be working and this could result in tougher measures in the coming months.
“As such, a second and more effective, nationwide state of emergency in Japan early next year cannot be ruled out,” economists said. That would weigh on Japan’s economy in the first quarter of 2021, they added.
- Covid-19 matches: 53,533 cumulative confirmed cases and 756 deaths as of Wednesday, according to Hopkins data.
Like Japan, South Korea’s daily new cases reached unprecedented levels this month – exceeding 1,000 for the first time since the outbreak.
But unlike in Japan, the government has taken a tougher stance in South Korea in response to the new wave of Covid cases.
The government announced Tuesday a nationwide ban on the gathering of five or more persons, and ordered tourist attractions – such as ski slopes and other winter sports facilities – to close, the Yonhap News Agency reported.
Taking this step, the bulk of South Korea’s economic damage could mostly be limited in the fourth quarter of this year, according to the Pantheon Macroeconomics.
- Covid-19: 98,737 cumulative confirmed cases and 444 deaths as of Wednesday, according to Hopkins data.
The Southeast Asian country brought Covid cases down to a seepage before latest increase starting in October, Viewed Hopkins data. It prompted the government to introduce a new round of partial lockdown measures in some parts of the country.
Economists from consulting firm Capital Economics said the outlook for the Malaysian economy has become “less optimistic” this quarter, especially on the front for private consumption.
“Another wave of the virus and the reintroduction of many restrictions on movement would have sent Q3 strong rebound in private consumption to the reverse. The high-frequency Google mobility data suggests that social distance remains a drag on activity,” they said in a Tuesday report.
But the other parts of the economy – such as exports – must continue to perform strongly, so the overall economic hit from the recent resurgence is likely to be “much smaller” than the previous wave, economists said.