Virus will spread further before fading
SINGAPORE (Mar 6): The Covid-19 outbreak has turned out to be far worse than we thought only a month ago. It has spread further and is now a global crisis — not just a mainly Chinese one. With the virus causing dislocations in major economic centres such as South Korea, northern Italy and now the US, Asian economies will suffer from a broader drop in overall global demand. This will be more damaging than the initial hit, which was mainly caused by a weaker Chinese economy.
Going forward, the economic impact on Asia will depend on a number of factors — first, the patterns in the disease itself, such as how many more new infections are likely before they peak and whether better treatment regimes and a vaccine will make the virus less frightening to ordinary folks; second, the effectiveness of policy responses, both globally as well as in individual Asian economies; and third, will the abrupt and unexpected nature of this economic downturn trigger other problems that might compound the economic damage?
