Covid-19 pandemic to cost Asia-Pacific economies US$620b: S&P

S&P Global Ratings is forecasting the Covid-19 pandemic will cost an estimated US$620 billion in total and permanent income loss for Asia-Pacific economies.

This cost covers the entire period from the first quarter of 2020 to mid-2021 when almost every major economy returns back to trend in the agency's baseline, it said in response to a query from The Business Times. 

The loss will also be distributed across sovereign, bank, corporate, and household balance sheets. 

The region's average growth rate will be 2.7 per cent, the agency said in an update to its Asia-Pacific economic forecasts on Monday.

S&P is also expecting economic contraction in Singapore, Hong Kong, South Korea, as well as a newly deflationary Japan. In addition, China's gross domestic product (GDP) growth rate is expected to slow to 2.9 per cent in 2020.

The real GDP 2020 forecast for Singapore stands at -0.8 per cent, from real GDP growth of 0.7 per cent in December 2019.

"We believe measures to contain Covid-19 have pushed the global economy into recession and could cause a surge of defaults among non-financial corporate borrowers," the report noted.

The revised forecasts are based on government authorities estimating the pandemic to peak in June or August 2020. S&P had revised their real GDP, inflation policy rate and unemployment rate forecasts in its latest update.

Amendment note: A previous version of this article incorrectly stated the real GDP 2020 forecast for Singapore to be -1.8 per cent instead of -0.8 per cent. We are sorry for the error.