The Monetary Authority of Singapore’s deputy managing director is confident in Asian markets’ ability to recover past the pandemic, but warns that there are still challenges ahead.
Jacqueline Loh made the argument whilst speaking at the Asian Financial Markets Forum last week.
She cited World Bank figures suggesting that while the global economy had contracted by 4.3%, the Asian market was at the forefront of the recovery.
“Indeed, the 2020 recession in Asia was shallower than in the rest of the world,” the MAS executive said. “This was due both to positive growth in China and Vietnam, as well as less severe recessions in other Asian countries.
“China was the first country to enter lockdown and the first to record a V-shaped growth rebound.
“In other Asian countries, more effective virus containment meant that domestic economic activity was less severely affected than in other parts of the world.
“Quickly restoring production capacity played into Asia’s strong presence in global value chains. Asian merchandise exports held up well, as global consumers spent more on goods while access to services was restricted. Asian exports of medical supplies and electronics expanded.”
Loh expected to see “a strong recovery in the second half of 2021” as more countries get on with their vaccination efforts.
“There are, however, still considerable uncertainties on the horizon,” Loh warned. “These include the course of the pandemic, progress on vaccination, the possibility of governments mistiming the withdrawal of policy support, and the evolution of US-China trade and investment relations.
“The pandemic is also likely to have lasting economic effects beyond 2021, including postponed investments, the negative impact of sustained job losses on human capital, global supply chain reconfigurations that emphasise resilience over efficiency, and high public and private debt levels. These effects will further threaten potential growth in economies globally.”
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