"COVID-19 Spread, Asia-Pacific Growth Rate Down 0.8%" Credit Rating Agencies Continue Downgrades

Economic Losses in the Asia-Pacific Region Due to COVID-19 Reach $211 Billion

South Korea 2.1% → 1.1%

[Asia Economy Reporter Kwon Jaehee] As the novel coronavirus disease (COVID-19) spreads globally and signs of economic slowdown emerge worldwide, international credit rating agencies are consecutively revising down their economic growth forecasts. Standard & Poor's (S&P) has lowered the Asia-Pacific region's gross domestic product (GDP) growth rate to 4.0%, the lowest since the global financial crisis.

According to a report published by S&P on the 6th, the GDP growth rate for the Asia-Pacific region has been cut by 0.8 percentage points from the previous 4.8% to 4.0% due to the impact of COVID-19. S&P estimates that the economic losses caused by COVID-19 will reach $211 billion (approximately 250 trillion KRW).

JP Morgan forecasts that the Eurozone GDP will decline by 0.8% in the first quarter, and the U.S. GDP will fall by 0.5% in the first half of the year. Global consulting firm McKinsey warned that if COVID-19 continues to spread, the global GDP growth rate this year could decrease from 0.3% to 0.7%.

In particular, China, the epicenter of COVID-19, has seen its growth forecast sharply lowered from 5.7% to 4.8%. S&P diagnosed that due to the risk of reinfection from COVID-19, the recovery of supply chains in China will be slow. Sean Roach, S&P's Chief Economist for the Asia-Pacific region, analyzed, "Even if demand increases and economic stimulus measures are implemented after the direct impact period of COVID-19 in the first and second quarters of this year, it will be difficult for China to achieve growth above 5% due to factors such as supply chain disruptions and losses to households and businesses."

Furthermore, S&P lowered South Korea's GDP growth rate to 1.1%. Initially, S&P had forecasted South Korea's growth rate at 2.1%, then revised it down to 1.6%, and within two weeks further reduced it to 1.1%. On the same day, JP Morgan also adjusted South Korea's GDP growth rate from 2.2% to 1.9%. This broad impact is expected to spread across key manufacturing sectors such as automobiles, steel, and petroleum, as well as service industries including travel, aviation, distribution, and hotels.

Additionally, S&P revised down Singapore and Taiwan's growth rates from 1.4% and 2.4% to 0.0% and 1.9%, respectively.

Hong Kong and Japan are expected to record negative growth. S&P forecasts Japan's growth to decline from 0.1% to -0.4%, and Hong Kong's from 0.2% growth to -0.8%.

This content was produced with the assistance of AI translation services.