Japan, Singapore worst-hit Asian economies by coronavirus: Moody’s Analytics

Snow falls as people wearing face masks walk through the Asakusa district on March 29, 2020 in Tokyo, Japan.

Tomohiro Ohsumi | Getty Images

Within Asia, the Japanese and Singaporean economies could struggle the most in the coronavirus pandemic, an economist from Moody’s Analytics said on Monday.

Both economies were already weak before the outbreak worsened over the past month — and stricter lockdown measures imposed to contain the virus spread will likely exacerbate their respective economic troubles, said Steve Cochrane, the firm’s chief Asia Pacific economist.

Latest official data in Japan showed the economy shrinking by 6.3% year over year in the three months to December, while preliminary estimates in Singapore indicated that the economy contracted by 2.2% in the quarter that ended in March.   

“Japan already was in recession coming into this; the first quarter for Singapore was very weak, I think this quarter will be even tougher for Singapore given the lockdown,” Cochrane told CNBC’s “Squawk Box Asia.”

“And then there is potential that in Japan, if the coronavirus spreads further, there could be more of a real lockdown rather than the kind of a soft lockdown that’s in Japan right now,” he added.

Spike in new cases

The two countries, some of the earliest to discover coronavirus cases outside of China, have reported more than 13,000 infections — among the highest in Asia, according to data compiled by Johns Hopkins University.

But unlike China which appeared to have the outbreak under control in recent weeks, Japan and Singapore experienced a surge in new cases of Covid-19 — the formal name of the disease caused by the coronavirus.

In response to a worsening outbreak, the Singapore government implemented — and recently extended — partial lockdown measures that include shutting schools and workplaces deemed not essential. In Japan, the government declared a nationwide state of emergency to urge people to stay at home, but still allowed some businesses to remain open.

Such worsening economic conditions facing Japan and Singapore are among the reasons why Asia Pacific will have a tough second quarter, said Cochrane.

“The combination of the, in a sense, closed economies in Southeast Asia and very weak export trends softening in North Asia it’s going to be a tough, tough quarter for the whole APAC region,” he said.

Cochrane comments came as the International Monetary Fund warned that for the first time in 60 years, Asia — one of the fast-growing regions in the world — will not register any growth this year because of the coronavirus pandemic.

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