Asia’s biggest economies are managing to escape prolonged fallout from the coronavirus pandemic. Now they just have to make sure rising cases in the rest of the world don’t put their recoveries in jeopardy.
China and Japan, the world’s second and third largest economies both reported Monday that their economies are picking up speed after languishing briefly in the coronavirus doldrums.
The news out of Asia contrasts with the West, where many nations are struggling with a resurgence of Covid-19, forcing them to once again impose restrictions in an attempt to tame their outbreaks.
In the US, Federal Reserve chairman Jerome Powell said last Thursday that the US economy will need more stimulus from both the government and the central bank to get through the crisis.
The Bank of England warned earlier this month of a recession for the UK economy as the country re-entered national lockdown. The European Union is facing a similar fate.
Louis Kuijs, head of Asia economics at Oxford Economics told CNN, “Because of a significantly better containment of the virus, most Asian economies are performing better than their Western counterparts.” He expects most major European economies to shrink this quarter because of new Covid-related restrictions.
The challenge now in Asia is how to keep the momentum going, given the slowing growth among major trading partners.
Frederic Neumann, co-head of Asian Economic Research at HSBC pointed out that Asian economies depend on global trade. “Lockdowns in Europe and a slowdown in the US pose the risk that Asia’s export recovery could take a breather,” he told CNN. “Asia alone cannot pull the global economy out of its slump.”
Fu Linghui, a spokesman for China’s National Bureau of Statistics, told reporters in Beijing that outbreaks in Europe and the United States have created uncertainties for China’s exports even though the total value of China’s trade has increased this year.
Kujis, of Oxford Economics, was also optimistic that as long as Asian countries can avoid new outbreaks of their own their economies will recover fast. However, infections in Japan recently reached a three-month high, and South Korea is also experiencing a resurgence.
“If Asian economies can continue to avoid major new lockdowns, the impact of weakness in Europe and the US will only soften the continued recovery in Asia, not undo it,” he said.