Covid-19 outbreak, China slowdown to hit Asean+3 economies

MANILA – The Asean+3 Macroeconomic Research Office (AMRO) expects the coronavirus outbreak that has slowed down the Chinese economy to also impact the gross domestic product (GDP) of the 10 member states of the Association of Southeast Asian Nations (Asean) and China, including Hong Kong, Japan, and South Korea, or the Asean+3.

In its analytical note on the coronavirus disease 2019 (Covid-19) published Wednesday, the AMRO said the slowdown in China would reduce 0.2 percentage point from the GDP growth of the Asean+3.

The region is likely to see a sharp drop in Chinese outbound travel and tourism, and will also drag regional travel and tourism due to fears of contracting the disease.

The AMRO also forecasted a decline in China’s imports as manufacturing output is disrupted and domestic demand is affected by the Covid-19.

The public’s contagion avoidance behavior will also play a role in slowing down economic activities in the Asean+3 region.

“In China, the epidemic puts great pressure on the health system and results in lost wages and lower productivity from sick days and work stoppages. The fear of infection and attempts to curtail contagion could lead to disruptions in transportation, manufacturing supply chain, provision of most services, closure of schools and businesses,” it said.

The AMRO said economies with a large tourism sector and a high share of Chinese visitors would be hit by the coronavirus epidemic.

“Among the Asean+3, Cambodia and Thailand are expected to be most affected,” it added.

The region’s aviation industry and hospitality services will be largely affected by the Covid-19.

“Most countries in the Asean+3 region have already been infected by the spread of the disease, and their growth could similarly be affected as is developing in China,” the AMRO analytical note read.

In the Philippines, China is the second-largest source of tourists, according to the Department of Tourism (DOT).

Nearly 1.5 million Chinese tourists arrived in the country in the first 10 months of 2019, DOT data show. Kris Crismundo / PNA – northboundasia.com