TOKYO – According to a report by the Japan Center for Economic Research, the coronavirus cut around $ 1.7 trillion in 2020 from the combined gross domestic product of Asia’s largest economies.
JCER estimated the economic losses from the coronavirus in 15 Asian countries and regions by comparing pre-pandemic GDP projections with GDP growth rates recorded afterwards.
Based on October 2019 forecasts by the International Monetary Fund, JCER calculated the nominal GDP that countries and regions would have achieved without COVID-19. The number would have grown 6.2% year over year to $ 29.84 trillion in 2020, but was actually $ 1.68 trillion less.
China posted the largest economic loss of the 15 economies at $ 638 billion. While China suffered a particularly severe blow from COVID-19 due to the size of its economy – which accounts for half of Asia’s GDP – and its role in global supply chains, China managed to contain the virus early but only grew 2.3 in 2020 %.
India also suffered a severe blow after growing 6% to 8% a few years ago. The country recorded an economic loss of $ 480 billion, the second largest decline.
Japan, the third largest economy in the world after the US and China, recorded the third largest economic loss at $ 162 billion as the service sector accounts for a large percentage of its GDP.
The tourism-related sectors suffered particularly strong declines. According to QUICK-FactSet, JCER examined the sales figures of around 16,000 listed companies in Asia between October and December 2019 – before the start of the pandemic – and April-June 2021.
Casinos suffered the biggest drop in sales at 53%, followed by airlines, whose sales plummeted 49%.
Tourism accounts for 20% of Cambodia’s GDP and the economic loss was $ 4 billion. In Thailand, which is also heavily dependent on tourism, its GDP was destroyed by 71 billion US dollars. Thai Airways International, the country’s airline, filed for bankruptcy in May 2020. Vietnam Airlines is also in serious financial trouble and plans a restructuring that will include halving its 20,000+ employees and cutting wages significantly.
While most Asian economies are grappling with the pandemic, only Taiwan benefited from it. Compared to pre-coronavirus projections, Taiwan’s GDP grew by $ 44 billion in 2020 as demand for many IT products such as servers and smartphones increased due to the global spread of home consumption and teleworking.
Asia’s GDP rebounded to levels near pre-coronavirus projections in the first half of 2021, largely driven by China’s rapid economic recovery and the yuan’s appreciation against the US dollar – events that inflated China’s GDP.
With the exception of Taiwan, the situation in Asia remains difficult. In the short term, however, an economic slowdown between July and September 2021 is inevitable, as the highly contagious delta variant has spread in parts of the region since July.
Although steps were taken in October to normalize the economy – including easing tourism restrictions in Thailand and Vietnam – the medium-term negative effects of staff and equipment shortages in these countries are expected to continue until at least 2022.
The recovery of the tourism sector is important, especially for Southeast Asia, where most economies are heavily reliant on vacationers. The report said the cross-border tourist movement is likely to rebound with the introduction of vaccination passports and “sandbox” programs that restrict the movement of foreign arrivals and are being tested in Thailand and other countries.
