How has Trading Been Affected in Asia Due to Corona

While Asia may have actually incurred less coronavirus-related deaths than Europe and the US overall, it has suffered a heavy socio-economic toll in the wake of the pandemic.

This trend has continued of late, as shares slipped in Asia at the beginning of the week amid increasingly volatile market conditions. Even major brands are struggling to thrive in the current climate, with Apple warning shareholders that it will fail to meet its profit target in Q3.

But how exactly has the pandemic impacted on Asian markets and trade, and what’s the outlook for the region in the near-term?

A Look at Trade and Industry in Asia

This trend has been driven by numerous factors, not least the virtual closure of a tourism sector that remains the lifeblood for Southeast Asian economies including Malaysia, Thailand and Vietnam.

Factory activity and production output has also contracted sharply across most of Asia throughout Q2, as even export powerhouses like Japan and South Korea have experienced considerable declines in demand.

This has overshadowed a modest uptick in China’s manufacturing output, as the nation finally begins to boost manufacturing after outsourcing retail orders to Turkey at the height of the pandemic in Asia.

Manufacturing gauges also tumbled significantly in the stricken economies Vietnam, Indonesia and the Philippines, at least according to the trusty Purchasing Managers’ Index (PMI).

As we’ve already said, this has contributed to a dramatic fall in share values in the region, while Asia’s basket of emerging currencies have also struggled for a clear direction throughout Q2 and Q3.

The yuan is currently outperforming most of its rivals in this respect, although even this currency has pared back of late after recently hitting a seven-month high against the greenback.

The Outlook for Asia’s Markets and Economies

Despite being disproportionately hit in the near-term, there’s plenty of optimism that Asia can record a relatively speedy recovery throughout 2020 and 2021.

This is particularly true when you compare the region with Europe and the US, and there’s little doubt that Asian economies are emerging from the recent pandemic in a position of relative strength.

If we look at China, for example, we see that GDP growth is expected to decline by 2.4% before the end of 2020. The corresponding declines in the US and Europe are forecast to be significantly larger, with negative growth of -11.5% predicted for EU member states.

This is in the worst-case of a second coronavirus outbreak across the globe, while China is also set to outperform its rivals if this doesn’t unfold.

More specifically, China’s economy could actually grow by a whopping 6.8% in 2021 without further spikes or another national lockdown, which compares well to the corresponding figure of 4.1% stateside.

This is positive news for Asia and its businesses, who can look forward to relative growth over the medium and longer-term.

 

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