Asia Pacific leading the global recovery from the pandemic: Moody's Analytics

ASIA Pacific is leading the global recovery from the Covid-19 pandemic, driven by control of the pandemic, easing of lockdowns, and improvement in global trade.

"The Asia Pacific economy has done the best job of containing Covid-19 and it is rebounding with the global recovery of industrial production and global trade. Further, it enjoys a level of fiscal support in many countries that will keep a floor under the economy and preserve enterprises and household financial conditions so that they are able to contribute to economic recovery," said Moody's Analytics chief APAC economist, Steve Cochrane.

But while the Moody's Analytics baseline economic outlook expects growth across the entire APAC region in 2021, economic recovery in the APAC region will not be fully complete until international travel and tourism flourish once again, noted the report.

Overall, the fastest growth in 2021 will be seen in China, Vietnam and Hong Kong. Asia's recovery is led by China, and China's recovery is led by exports, which have been above pre-Covid-19 levels since midyear.

"Every month through October they have been stronger than in the prior month, driven by pent-up demand for many durable goods around the world, and by a surge in pandemic-related demand for pharmaceuticals and medical equipment as well as rising demand for electronics, computer systems, laptop computers and mobile phones as the global population increasingly works and studies from home," said Mr Cochrane in the report.

More recently, China's imports have also been accelerating, an indication of the ramping up of supply chains throughout much of the Asia-Pacific region, he noted.

More important for China, the domestic economy is revving up. Retail sales rose above their year-ago level in September for the first time since the arrival of the pandemic in January. Fixed asset investment, spurred by fiscal support and local government bond issuance, has also begun to rise over the year-ago level.

The true impact is when growth rates are combined with the depth of each country's downturn, which determines when each country's GDP returns to a new peak level.

China has already achieved this in the second quarter as it rebounded quickly from its recession that started in early January. Taiwan and Vietnam will be at new peaks by the time Q4 of 2020 comes to an end said Moody's Analytics.

On the other end of the spectrum, Japan, the Philippines and India will not surmount new peaks until the second half of 2022. Japan's slow rate of growth combined with a longer recession that began in the fourth quarter of 2019 will delay its shift back into economic expansion. India and the Philippines were the two hardest hit by the economic impacts of the pandemic and have the deepest holes to climb out of.