On Friday, in a statement S&P Global Ratings stated, if China’s coronavirus were to spread extensively in the Asia-Pacific region, it could wipe out $211 billion off the combined economies in the region with Japan, Singapore, Australia and Hong Kong being the most exposed.
S&P has cut its 2020 growth forecast for China to 4, down from its earlier estimate of 5.7%. It has also forecast a slower growth rate for Australian to 1.2% from an already below-trend 2.2% in 2019.
It estimates that Japan would take 0.5 percentage point hit while South Korea would take a 1 percentage point knock.
“The balance of risks remains to the downside due to local transmission, including in economies with low reported cases, secondary transmissions in China as people return to work and tighter financial conditions,” reads the S&P report.
It also sees, Hong Kong’s economy contracting by -0.8% in 2020, while Singapore’s remaining flat; Thailand’s economy is slated to slowdown by 1.6%.
Significantly, S&P did not cut its growth forecasts for emerging markets of India, Indonesia, Malaysia, and the Philippines, based on the fact that reported infections in these countries are still low.
It was however quick to note that the outlook could quickly change if the low level of cases was due to minimal testing and if those countries were swept up in financial contagion.
“We have already had a taster of what can happen with overshooting exchange rates in response to a pick-up in world’s fear gauge,” said S&P.