Covid-19 is undoubtedly the worst crisis to have impacted the financial world. The pandemic has had a far-reaching effect, and it will take a long time to get to the end of the road to recovery.
Dr.Simon Baptist, Global Economist/Managing Director Asia at The Economist Intelligence Unit, said in his presentation, ‘The Economist Keynote: The New Economy’, at the Asia Real Estate Summit 2020, that it will take many years for the economy to recover to pre-pandemic levels.
How quickly a vaccine will roll out will influence global economic recoveries. Other factors aside from the pandemic include Joe Biden taking office in America who should make it easier for Chinese firms to operate and the impact of a looming hard Brexit. There will be a disruption of international trade, not to mention high levels of government debt created by the outbreak.
Additionally, COVID-19 has led to a new wave of nationalism. Governments were under pressure to act fast, and corporations to reduce their supply chains. Meanwhile, the trade wars between China and the US simmer on but should benefit Malaysia, Vietnam, and Thailand, and overall the global economy is expected to shrink by 4.7 percent with India, Europe, and America the worst hit due to having the largest outbreaks.
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Forecasts expect India to experience a double-dip recession, while Thailand’s student protests, lack of tourism, and deflation pose risks to its recovering economy. Singapore has also been hit extremely hard since it is built on international connections so instantly impacted by the global downturn. Meanwhile, Vietnam’s economy is fairing well likewise Sri Lanka due to a rise in global demand for tea.
Baptist predicts that over the next five years, new Asian tigers will emerge being Bangladesh, Myanmar, and China. The latter has proven to have ridden the Covid wave well. China is one of the top four trading markets but carries risks of having all its eggs in one basket. Hence Baptist stresses the importance of shortening supply chains to reduce risk and to focus on domestic economies even for Indonesia and India.
Time will tell how economies will fare, and all eyes will be countries like Australia to see how they will reopen after the virus as they closed their borders, as well as the opposite side of the world to see what disruption unfolds due to Brexit. 2020 has no doubt been a challenging year for a variety of socio and economic factors but news of a successful vaccine should pave for a more positive 2021.
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