Economic Challenges and Adjustments for the Asia-Pacific Region: COVID-19 and Beyond

Abstract

The global economy is facing an unprecedented healthcare crisis as well as an economic crisis. GDP growth rates, trade flows, cross-border investments, and supply chains are negatively impacted. According to Johns Hopkins University, at the date of this writing, the COVID-19 healthcare impact has swept across the planet, has nearly impacted over 7 million people, and has resulted in the death of more than 480,000 individuals. The economies of China and the US have certainly contracted, and the available data, while tentative, shows significant contraction in the Chinese economy as well as other Asian economies, such as India. The two leading economies, the United States and China, number one and number two, respectively, will have significant contractions and a slowdown. While the US government provided a significant stimulus package, exceeding 3 trillion dollars, and is likely to add more, the Chinese government is reluctant to provide a significant stimulus package that will be large enough to return the Chinese economy to a semblance of normality. The recent debt burden of the Chinese government, estimated at 1 trillion dollars, arising from its belt and road transcontinental initiative, is significant. Moreover, the economic impact on the slowdown in China is likely to also severely affect small and medium-sized enterprises. Small and medium-sized enterprises account for over 65% of China’s output, and the funding of these small and medium-sized enterprises is not always on solid ground. The Chinese economy is likely to be in a slowdown that could last beyond the next two years. The Chinese economy contracted significantly with over 70,000 firms closing their doors and sending their workers home. This is the first significant Chinese contraction since the late 1970s. JP Morgan has also indicated that the US economy is contracting significantly during the second quarter of 2020, and this contraction may continue throughout 2021. Unemployment in the US is as high as 13 to 16%. The Coronavirus pandemic is both an economic crisis and a healthcare crisis. The global economy is likely to shrink in 2020, and various estimates range; however, a 6 percent decline in the global economy is highly likely. The US economy and the Asia-Pacific economy will have a reduction in employment, and the unemployment numbers for the US are likely to be as high as 13.6 to 16%. Youth unemployment is likely to increase significantly across Organization for Economic Cooperation and Development (OECD) economies, Asia-Pacific economies, and emerging economies. The slowdown and JOURNAL OF ASIA-PACIFIC BUSINESS 2020, VOL. 21, NO. 3, 165–168 https://doi.org/10.1080/10599231.2020.1783970