In the worst case scenario, China may experience less than 3 percent growth, while Japan, Australia and Hong Kong may face a recession risk, according to the agency’s report.
Fears of the consequences of the outbreak, which has spread to at least 85 countries since it appeared in China in late December, caused global markets to decline, as investors worried about its economic repercussions.
Standard & Poor’s said it expects the region to grow 4.0 percent this year, at a time when supply and demand shocks caused a $ 211 billion gap in the economy. The latest figure is compared to an estimate of 4.8 percent growth released in December and the worst performance for the region since the 2008 global financial crisis.
“The outlook for the Asia Pacific region is further darkened by the outbreak of the newly created Corona virus. This will cause shocks to domestic supply and demand in Japan and Korea. This will mean further weakening external demand from the United States and Europe,” the agency said.
The report pointed out that economies are suffering a double blow due to the decline in demand, at a time when consumers are obligating their homes for fear of infection, while supplies have declined due to the closure of factories.
He expected the Chinese economy, which was already facing difficulties even before the crisis of the virus, to grow by 4.8 percent this year, the worst rate in three decades.
But, he added, in the worst cases, “on imposing local casualties as people return to work and re-impose some restrictions on activity,” growth may decline to only 2.9 percent.
Hong Kong’s economy, which experienced its first recession last year since 2008, is expected to shrink further.
Along with Singapore, Thailand and Vietnam, the city will be the most affected, as the tourism sector, which has been hit globally, contributes to more than ten percent of growth.
However, “Standard & Poor’s” confirmed that economies will likely see a recovery later.
“The recovery is likely to be delayed until the third quarter, if there are indications by the second quarter that the virus has been contained globally,” the report said.
“We assume that the Corona virus will not permanently disrupt the workforce or the stock of capital or production, and therefore it is assumed that the economies of the region occupy the same number of people and implement the production capacity by the end of 2021 as they would have done in the absence of the virus.”
The Asian Development Bank also reported on Friday that it expects China to experience a decline of $ 103 billion or 0.8 percentage points in its gross domestic product, while losses could reach $ 22 billion or 0.2 percentage points for other developing economies in the region.
The bank said in a statement that “the magnitude of the economic losses will depend on the development of the spread of the disease, which remains highly foggy.”