As reported by Fitch Solutions, amidst the high mounting tension prevailing currently in form of deadly Coronavirus Pandemic, most of the Asian Markets are acting defensively, with their governments bailing out the Asian economies by pumping out huge fiscal stimulus packages and enacting rate cuts to held them against the COVID-19 pandemic.
For illustration: – Since the initial stages of outbreak reported globally, Singapore and Hong Kong both have joined in their fiscal stimulus packages and monetary policy to ease out the pandemic effect on their economies.
The premier banks like The Reserve Bank of Australia and most other central banking institutions across the region have been issued a strict banking adherence to operate their business with a record lower policy interest rates and they have also very limited room to make changes in the conventional monetary policy initiatives.
The overall growth in Asian territory is estimated to grow at just 4.1% this year, a dip of 0.2% as shown in 2019. Most Asian economies as well other top global nations are facing uphill task as they are witnessing a significant downside risks in the first half of this year, and with the anticipation of a mild gradual improvement in the second half this year, should the outbreak be controlled.
The Thai government have implemented plans to curb the taxes and as well as subsidies for those economic territories that have been worst affected in the COVID-19 outbreak. Indonesian government have also planned to chip in with an economic stimulus package worth $618.2M to support the tourism and retail sectors-its lifeline.
They although have as well warned that the Economies with higher debt levels would sooner or later run out of any further policy space. This includes countries such as Malaysia, Japan, Indonesia, and Philippines who have the higher debt levels as well as higher existing current account deficits. The worsening effect on financial market conditions, low policy interest rate operations of central markets can also affect implementation of new strategies in such economies.
Asian Economies have adversely suffered and are hugely impacted with all the negativity of the sudden local outbreaks, financial market stress, and supply-and-demand shocks in China due to lockdowns. Such is the worst part of the story that the largest economic contributor for Asian territory, aiding in total of 23.1% to Asia’s GDP in 2019, the best GDP contributors like South Korea, Japan, and Singapore have the most number of reported COVID-19 cases in Asia, outside Chinese territory and therefore have hugely been devastated by the aftermath of the pandemic.
The menace of COVID-19 is such that disruptions as witnessed across the region in the supply-chain sector, distribution sector and imposed set of regulations on the banks, have affected nations like Thailand, Malaysia, Australia and Vietnam as the growth of these nations are expected to recess down by 0.6 percentage points (ppt), with tourism based Thailand being expected to be hardest hit amongst all Asian economies.
Political implications may also affect policies imposed. Some countries have delayed travel bans from China due to fear of backlash. Larger countries with poorest health service, like Indonesia and India, may try to reduce public panic by reporting fewer cases. Pakistan, Cambodia, Laos and Myanmar also have poor public health infrastructure and limited resources for support in the event of a local outbreak.