Beyond the adverse impact on economic growth, the Coronavirus Disease 2019 (COVID-19) pandemic is also expected to hit trade and investment hard. Having been weighed down by the China-US trade tension and the slowing economic growth in the previous year, the World Trade Organization (WTO) projected global trade to plummet between 13% and 32% across every regions and all sectors in 2020.2 The United Nations Conference on Trade and Development (UNCTAD) had also forecasted that global foreign direct investment (FDI) to decrease by up to 40% in 2020, from their 2019 value of USD 1.5 trillion, and this would bring FDI below USD 1 trillion for the first time since 2005, with FDI flows to the developing Asia to decline between 30% to 45%.3 For ASEAN, this means a recovery from the1.8% contraction in total trade in 2019 is highly unlikely and FDI inflows in the region are expected also to face strong downward pressure.
As the COVID-19 global pandemic continued to spread, countries around the world are bracing for a deep downturn, as lockdowns and quarantines have resulted to job losses and business closures. Governments, including ASEAN Member States, have taken swift action and applied monetary, fiscal, and sector-specific measures to cushion the widespread impact of the pandemic. To date, the combined fiscal stimulus packages implemented by the AMS has reached an equivalent of USD318.2 billion or 10.1% of ASEAN GDP in 2019.
The second issue of the ASEAN Policy Brief examines the ASEAN policy responses to the COVID-19 pandemic.
The ASEAN Policy Brief can be downloaded here.
Since the World Health Organization (WHO) finally declared the COVID-19 outbreak as a global pandemic on 11 March 2020, lives have been upended and economic activities disrupted around the world. As of 9 April 2020, the COVID-19 outbreak, which originated in Wuhan, Hubei Province, China, has reached 203 countries, affecting 1,476,819 persons, with 87,816 deaths (84,477 of which are outside China). In ASEAN, the numbers too are rising, with more than 15,532 confirmed cases and more than 529 deaths reported by 9 April.
All ten AMS have confirmed cases and the number of expected infections is feared to increase manifolds in the coming days (Figure 1). Without a doubt, the coronavirus will have a negative impact on ASEAN’s economy and that of the rest of the world in 2020.
Key sectors have been affected, particularly travel and tourism, and retail and other services sectors; business operations hence supply chains disrupted; employment and livelihood put at risk; while consumer confidence has declined. The COVID-19 outbreak has diminished prospects of an economic recovery from a broad global slowdown last year. While initial pronouncements estimated a brief and limited impact on the global economy, the exponential spread of the outbreak to other regions including Europe, US, and also ASEAN, set off the tapering of growth prospects.