by S BIRRUNTHA / pic credit: sidc.com.my
THE Asia-Pacific (APAC) region’s economic recovery is expected to take the lead from the rest of the world as it rebounds from the Covid-19 recession.
Moody’s Analytics chief APAC economist Steve Cochrane said much of the region will have regained all of its lost output by the end of 2021, although India and the Philippines will struggle to reach this benchmark by the end of 2022.
He added that to a large degree the APAC region has contained the pandemic and most countries in the region have demonstrated the willingness and capability of capping new clusters as they arise.
“China, South Korea, Taiwan, Thailand and Singapore stand out with the most effective and consistent containment policies. New clusters have recently arisen in Hong Kong, Japan, Korea and Malaysia.
“The Philippines struggled with the coronavirus but has managed to cut its daily case count in recent months.
“Only Indonesia is still struggling with a high and still-rising daily count,” he said in an analytic note yesterday.
Cochrane said the region’s manufacturing supply chains are fuelling economic rebound on demand for goods related to the pandemic recovery such as computers, mobile phones, IT systems, pharmaceuticals, personal protective equipment and consumer durable goods such as autos and household appliances, as well as holiday-related consumer goods.
Additionally, he said the policy has remained consistently supportive and should continue to be so through 2021. The expected shift in the US foreign policy under the upcoming administration of President-elect Joe Biden will also benefit the region, as the uncertainty that has weighed on global trade over the past two years will be lifted.
“The threat of higher tariffs on China’s exports to the US, or broader tariffs applied to goods exported by other APAC countries that have trade surpluses with the US, is expected to be stepped back,” he said.
In terms of monetary policy, Cochrane noted that all the region’s central banks have quickly lowered their policy interest rates either to near zero or to historic lows when the pandemic became evident.
“Fiscal policy is also supportive and should remain so in the coming year.
“Malaysia, Singapore, Australia, Japan and Thailand stand out in terms of the amount of fiscal stimulus, and the targeted nature of their spending plans toward direct payments to households, support of small and medium industries, and extended assistance to hard-hit industries such as travel and tourism, which may well be the last sector to recover from the impacts of the pandemic,” he added.
However, he cautioned the near-term risks which could impact the region’s recovery, which includes the emerging clusters of the Covid-19 in the region that are not effectively contained, as well as strict economic shutdowns in Europe and North America which could staunch the rebound in global demand for goods.