Although the coronavirus outbreak is predicted to cause a sharp but temporary economic disruption in most emerging markets in Asia, the Philippines will be among those least affected.
This assessment was made by investment house Morgan Stanley in a research note issued on February 3, 2020.
The outbreak’s impact on the Asian economy will come through via tourism/travel, retail sales, and disruption of production activities, given capacity closures.
Outside of China, the economies likely to suffer the most are Hong Kong, Singapore, Thailand, Malaysia , Taiwan and Korea. India, Indonesia and the Philippines are considered to be less vulnerable to growth implications.
The research note nevertheless was confident for growth to normalize and a gradual recovery to take place on the back of continued policy support and measures to ease trade tensions.”
Morgan Stanley recalled that during the 2003 SARS episode, macroeconomic indicators such as tourist arrivals, retail sales and industrial production had shown material deceleration. It took four months from the onset of the contagion for these indicators to bottom before showing improvement at that time.
But compared to the SARS episode, Morgan Stanley noted that emerging Asia’s exposure to the macro impact from a public health threat now seemed bigger, given the region’s mostly higher tourism revenue-to-gross domestic product (GDP), higher share of Chinese tourist arrival and higher trade linkages with China in terms of integrated supply chains and catering to China’s domestic demand to date.
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