Covid’s revival in Japan and South Korea could affect Asia’s economic recovery

SINGAPORE – As 2020 draws to a close, many investors see Asia as the region with one of the best economic prospects next year due to relatively better control of the coronavirus outbreak.

But a recent rise in Covid cases in some countries threatens to dampen the region’s economic outlook, some analysts have warned.

“For some of Asia’s giants, this year’s Covid-19 is unlikely to improve when the clock strikes 12 on New Year’s Eve,” said research firm Pantheon Macroeconomics.

Certainly, the cases reported daily in many parts of Asia – where the virus first struck – remain smaller compared to those in Europe and the US, according to data compiled by Johns Hopkins University.

But some countries are now struggling with a much worse renaissance than they experienced earlier in the pandemic. Even territories that have had major success in terms of virus content may not be exempt, with Taiwan reporting this week the first case transmitted locally since April 12 – highlighting the difficulty in eradicating Covid.

Here’s a look at Asian economies struggling with a renewed rise in coronavirus infections and how they would affect their economic outlook.

• According to Covid-19: 207,007 confirmed cumulative cases and 2,941 deaths since Wednesday, according to Hopkins data.

The number of coronavirus infections reported daily 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 have warned that the health care system is facing considerable pressure due to the pandemic, according to Reuters. But Japanese Prime Minister Yoshihide Suga has refrained from declaring a state of national emergency – even though he has said he will suspend a travel subsidy program to slow the spread of the coronavirus, the news agency reported.

Economists at Pantheon Macroeconomics wrote in a report Wednesday that the Japanese government’s “relatively weak” rules on social distancing do not appear to be working, and that could lead to tougher measures in the coming months.

“As such, a second more effective nationwide state of emergency in Japan early next year cannot be ruled out,” economists said. This would affect Japan’s economy in the first quarter of 2021, they added.

• According to Covid-19: 53,533 confirmed confirmed cases and 756 deaths since Wednesday, according to Hopkins data.

Like Japan, South Korea’s new daily cases this month have reached unprecedented levels – exceeding 1,000 for the first time since the outbreak.

But unlike Japan, the government has taken a tougher stance in South Korea in response to the new wave of Covid cases.

The government announced a nationwide ban on gathering five or more people on Tuesday and ordered the closure of tourist attractions – such as ski slopes and other winter sports facilities – the Yonhap news agency reported.

Taking this step would allow most of South Korea’s economic damage to be covered for the most part in the fourth quarter of this year, according to Pantheon Macroeconomics.

• According to Covid-19: 98,737 cumulative confirmed cases and 444 deaths as of Wednesday, according to Hopkins data.

The Southeast Asian country reduced Covid cases in a flow before the last increase, which began in October, Hopkins data showed. This has led the government to impose a new round of partial blockade measures in some parts of the country.

Economists at Capital Economics said the outlook for Malaysia’s economy had turned “less optimistic” this quarter, especially on private consumption.

“A second wave of viruses and the re-imposition of many movement restrictions will severely reduce Q3’s return to private consumption. Google’s high-frequency mobility data suggests that social distance remains an obstacle to activity,” they said in a report on Tuesday. . .

But other parts of the economy – such as exports – should continue to function strongly, so the global economic blow from the latest renaissance is likely to be “much smaller” than the previous wave, economists said.