South Asia and Indonesia are a big worry

We remain deeply concerned about the rapidly rising number of cases of coronavirus across South Asia as well as Indonesia. A failure to contain the virus would have significant economic consequences for these places.  More encouragingly, there are a growing number of countries that appear to be succeeding in containing the virus. Over the past week, Vietnam, Taiwan, Korea, Hong Kong have all reported ten or fewer new cases of the virus each day. There are also signs that Malaysia and Thailand are “flattening the curve”. Even in places where the virus is being successfully contained, life remains far from normal. Schools remained closed in a number of these places, which will make it difficult for parents to return to work. And even when in cases where shops, restaurants and other entertainment venues are being re-opened, fear of catching the virus is keeping people away. Meanwhile, the global outlook is continuing to worsen. We are forecasting a 5.5% contraction in global GDP this year, far bigger than the 0.5% fall seen during the global financial crisis. Overall, we think regional GDP will fall by 3% this year, with Thailand, Singapore and Hong Kong likely to be the worst hit economies.