Asia-Pacific economies face $211-billion hit from virus, says S&P

HONG KONG — The coronavirus could wipe more than $200 billion off Asia Pacific economies this year, S&P Global ratings warned Friday, sending growth to its lowest level in more than a decade, as governments struggle to combat the disease.

In a worst-case scenario, China could see growth of less than three percent, while Japan, Australia and Hong Kong could "flirt with recession", it said in a report.

Fears about the impact of the outbreak, which has spread to at least 85 countries since it began in China in late December, have hammered world markets as investors fret over its economic impact.

S&P said it expected the region to grow 4.0 percent this year as supply and demand shocks blow a $211 billion hole in the economy. That compares with a 4.8 percent estimate given in December and would be the worst performance since a contraction in 2008 caused by the global financial crisis.

"Asia-Pacific's outlook has darkened due to the global spread of the coronavirus," it said. "This will exert domestic supply-and-demand shocks in Japan and Korea. It will mean weaker external demand from the US and Europe"


The report said economies were suffering from the double-whammy of weak demand as consumers stay home for fear of catching the disease, and falling supplies as industries are rocked by shutdowns.

It saw China's economy -- which was already stuttering before the crisis struck -- expanding 4.8 percent this year, which would be the worst in three decades.

However, it added that in the worst case, which "assumes localized reinfections as people return to work and the re-imposition of some restrictions on activity" growth could crash to just 2.9 percent.

Hong Kong, which suffered its first recession last year since 2008, was tipped to shrink further.

The city, along with Singapore, Thailand, and Vietnam would be the hardest hit, with tourism -- which has been battered globally -- accounting for around 10 percent of growth on average.

Still, S&P did say that economies would likely see healthy rebounds.

"A U-shaped recovery is likely to be delayed until the third quarter if signs emerge by the second quarter that the virus is globally contained," the report said.

"We assume that the coronavirus will not permanently impair the labour force, the capital stock, or productivity -- hence, the region's economies should be employing as many people and producing as much output by the end of 2021 as it would have done in the absence of the virus."

Also on Friday, the Asian Development Bank said it saw China taking a $103 billion hit, or 0.8 percentage point hit to GDP, while losses could hit $22 billion -- or 0.2 percentage points -- for other developing economies in the region.

"The magnitude of the economic losses will depend on how the outbreak evolves, which remains highly uncertain," the bank said in a statement.

Agence France-Presse

Trump brings tough trade message to APEC

DANANG, Vietnam — U.S. President Donald Trump set out a strong message on trade at a meeting of Asia-Pacific countries in Vietnam on Friday, saying the United States could no longer tolerate chronic trade abuses and would insist on fair and equal policies.

Trump said the United States was ready to make a bilateral deal with any country in the Indo-Pacific region, but only on the basis of “mutual respect and mutual benefit.”

Although he was addressing a meeting alongside the summit of Asia-Pacific leaders, Trump repeatedly referred to the Indo-Pacific region and mentioned the importance of India in his speech.

“When the United States enters into a trading relationship with other countries or other peoples, we will from now on expect that our partners will faithfully follow the rules,” he said in the seaside resort of Danang.

“We expect that markets will be open to an equal degree on both sides and that private investment, not government planners, will direct investment,” he said in a speech ahead of a summit of Asia-Pacific Economic Cooperation leaders.

Trump arrived in Vietnam from China on the fourth leg of a 12-day trip to Asia. Redressing the balance of trade between Asia and the United States is at the center of Trump’s “America First” policy he says will protect U.S. workers.

The difference between Trump’s and China’s approaches was made more stark by comments in a later speech from Chinese President Xi Jinping, who said globalization was an irreversible trend and voiced support for multilateral trade deals.

While China has by far the biggest trade surplus with the United States, Vietnam is also on the list of those surpluses the Trump administration seeks to reduce.

APEC, which has long championed free trade, has itself been convulsed by the changes under Trump.

Since Trump abandoned the Trans Pacific Partnership TPP trade deal early in his presidency, the remaining 11 members have struggled to build momentum to keep it alive.

Leaders of TPP countries are due to meet on Friday after talks among ministers ended in confusion on Thursday with Japan’s economy minister saying that they “agree in principle” and his Canadian counterpart saying that was not true.

Trump broke early with the “Pivot to Asia” of the Obama administration, worrying some traditional allies that he would allow China to extend its increasing dominance.

South China Sea

Danang itself sits on the shore of the South China Sea, one of the region’s biggest security headaches and where China’s neighbors challenge its sweeping claim to most of the waterway as having no basis in law.

Trump said the region’s future depended on upholding “freedom of navigation and overflight, including open shipping lanes.” He also mentioned “territorial expansion” among evils such as drugs, people smuggling and terrorism.

Vietnam has become one of the most vocal critics of China’s claims in the South China Sea and its construction of artificial islands.

In a sign of possible competition with China’s grand Belt and Road plan, Trump said he would push the World Bank and Asian Development Bank to fund infrastructure development and would reform U.S. development finance institutions.

Trump said that would “provide strong alternatives to state directed initiatives that come with many strings attached.”

“Above all, we seek friendship and we don’t dream of domination,” he said.

Danang has a special place in U.S.-Vietnamese history: it was where the first U.S. ground troops disembarked in 1965 in the escalation of a war that would last another decade before the communist victory.

Danang was close to some of the heaviest fighting and its air base was the route through which many Americans of Trump’s generation were sent to the war.

Trump himself did not serve, receiving five deferments — one for bone spurs in his heel.

source: interaksyon.com