The coronavirus is expected to force Asean’s economies to either slow down rapidly or contract in the current quarter, according to economists.
Singapore is due to post its largest budget deficit since at least 1997, pledging US$4.6 billion in dedicated support for an economy being hammered by the virus.
Singapore is forecast to be the worst affected Asean member with quarterly growth falling by more than 1 percentage point, while Indonesia is expected to grow by 4.7 per cent this year.
However, Indonesia’s crowded cities and limited health care would seem particularly vulnerable to a major Covid-19 outbreak.
Singapore, as a major trading partner with China, is expected to contract 0.6 per cent this quarter: the first decline since the 2009 recession.
Asean was still suffering from the effects of the US-China trade dispute when the coronavirus shut down businesses and whole Chinese cities.
The Singapore Tourism Board and trade bodies have unveiled support measures for the tourist sector to reduce the impact of the virus.
The Skills Future Singapore, Workforce Singapore Board, Singapore Hotel Association and Food, Drinks and Allied Workers Union have all backed the measures.
Action hopes to minimise potential losses, train workers and redesign jobs to prepare for when demand returns.
Tourism companies will gain support to train staff through the Training Industry Professionals in Tourism fund that promises to pay 90 per cent of course fees and trainer fees from the previous 50 per cent cap.
“The impact of the coronavirus on economies in Asia is potentially huge, as tourism in the region takes a beating. From deserted hotels to empty airports, the impact of this little scrap of protein and lipid on economies in the region is potentially enormous,” said Robert Carnell of ING in Singapore.
“If this doesn’t sound sufficiently scary, bear in mind that tourism is just one of the channels through which the coronavirus can weaken the GDP growth of Asian countries grappling with this epidemic.”
Australia, South Korea, Taiwan and Thailand were also tipped to record their worst economic performance in years in the first quarter.
“The base case is rapidly shifting from ‘bad’, meaning only China is impacted, to ‘ugly’, where both emerging Asia and developed economies see soaring infection rates and deaths,” said Michael Every at Rabobank in Hong Kong.
“Its [economic] effects will likely resemble the global financial crisis of 2008-09 more than the Sars outbreak in 2003,” he added.
Singapore’s economy is dependent on China. Picture credit: Wikimedia
