Virus outbreak adds to pressures on APAC growth: Moody's

24 Feb '20

1 min read

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The coronavirus outbreak has added to other pressures on growth in Asia Pacific, with the impact felt primarily through trade and tourism, and for some sectors also through supply-chain disruptions, Moody's Investors Service said in a recent report. The impact will continue for several weeks before tailing off and allowing normal economic activity to resume.

"We have lowered our China growth forecast to 5.2% for 2020 from 5.8% previously, reflecting a severe but short-lived economic impact, with knock-on effects for economies across the region," said Christian de Guzman, a Moody's senior vice president.

Specifically, Moody's expects Macao (Aa3 stable) and Hong Kong (Aa3 stable) will face the biggest hit, given their close economic integration with China (A1 stable), the company said in a press release.

The forecast revisions also incorporate updated views unrelated to the coronavirus outbreak, including weaker domestic demand in India (Baa2 negative) and Thailand (Baa1 positive), as well as expectations of policy offsets.

Reduced Chinese demand for Asia's exports and supply chain disruptions represent the two most direct transmission channels for slowing economic growth, although services trade adds a third channel, Moody’s said.

Fibre2Fashion News Desk (DS)

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