AS the Covid-19 pandemic continues to weaken the global economy, economic spillovers are quickly escalating into a second-round of shocks hampering Asia Pacific’s recovery from the crisis. 

Moody’s Investors Service in a report released today said the crisis is manifesting itself in country-specific and regional ways and government relief measures, though swift and extensive, will not be enough to offset the effects on the economy.

“Widespread containment measures are crippling domestic consumption and production, which is spilling over to other parts of the region in the form of lower demand for commodities, imported goods and services and supply chain disruptions,” said assistant vice-president Deborah Tan. 

While China has resumed economic activity, other nations are still struggling to contain the virus. 

“Slower economic growth will weigh on the resumption of supply chains and trade flows, particularly for tourism and retail,” she said. 

The report said although Asia’s external and fiscal buffers are generally more robust than those in other regions, its responses to date will only cushion some of the impacts and not fully offset the economic and credit damage. 

“Covid-19 is exposing vulnerabilities in existing systems and we expect policy space to be constrained for economies with existing fiscal challenges or elevated external vulnerabilities.

“Weaker global growth and heightened risk aversion in financial markets have led to significant capital outflows from the region. Countries with twin fiscal and current-account deficits are already experiencing bouts of currency weakness.”

Moody’s noted in the report that only Malaysia and Australia had allowed withdrawal from pension funds while taking other measures such as a debt repayment holiday, easing monetary policies, wage subsidies, credit guarantees, tax and social relief , and direct cash handouts. – Bernama, April 21, 2020.