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In Japan, South Korea may have an effect on Asia’s financial restoration

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

Tomohiro Ohsumi | Getty Images

SINGAPORE – Towards the end of 2020, many investors are viewing Asia as the region with one of the best economic prospects for the next year as the coronavirus outbreak can be relatively better controlled.

However, a recent surge in Covid cases in some countries threatens to dampen the region’s economic outlook, some analysts have warned.

“For some of the Asian giants, this year’s problems with Covid-19 are unlikely to get better when the clock strikes 12 noon on New Year’s Eve,” said research firm Pantheon Macroeconomics.

That said, many parts of Asia – where the virus first appeared – remain lower than in Europe and the US, data from Johns Hopkins University showed.

For some of the Asian giants, this year’s Covid-19 problems are unlikely to get any better when the clock strikes 12 noon on New Year’s Eve.

But some countries are now struggling with a far worse resurgence than they did before the pandemic. Even areas that have made great strides in containing the virus may not be spared. Taiwan this week reports its first locally transmitted case since April 12 – underscoring the difficulty in eradicating Covid.

Here’s a look at the Asian economies grappling with a renewed spike in coronavirus infections and how that would affect their economic prospects.


  • Covid-19 balance sheet: 207,007 cumulative confirmed cases and 2,941 deaths, according to Hopkins data on Wednesday.

The number of daily reported coronavirus infections in Japan rose again in November and topped 3,000 for the first time last week, Hopkins data showed.

According to Reuters, medical groups in the country warned that the pandemic will put a significant strain on the health system. However, Japanese Prime Minister Yoshihide Suga failed to declare a state of national emergency – despite saying he would suspend a travel subsidy program to slow the spread of the coronavirus, the news agency reported.

Economists at Pantheon Macroeconomics wrote in a Wednesday report that the Japanese government’s “relatively soft” rules on social distancing don’t appear to be working and that this could lead to tougher measures in the coming months.

“Therefore, a second and more effective nationwide state of emergency in Japan early next year cannot be ruled out,” said the economists. That would weigh on Japan’s economy in the first quarter of 2021, they added.

South Korea

  • Covid-19 balance sheet: 53,533 cumulative confirmed cases and 756 deaths on Wednesday, according to Hopkins data.

As in Japan, in South Korea daily new cases reached unprecedented levels this month – above 1,000 for the first time since the outbreak.

Unlike Japan, the government in South Korea has taken a tougher stance in response to the new wave of Covid cases.

The government on Tuesday announced a nationwide ban on gathering five or more people and ordered the closure of tourist attractions such as ski slopes and other winter sports facilities, Yonhap news agency reported.

This move, according to Pantheon Macroeconomics, would allow most of South Korea’s economic damage to be contained for much of the fourth quarter of this year.


  • Covid-19 balance sheet: 98,737 cumulative confirmed cases and 444 deaths on Wednesday, according to Hopkins data.

The Southeast Asian country kept Covid cases to a minimum before the recent surge from October, Hopkins data showed. This led the government to launch a new round of partial closure measures in some parts of the country.

Economists with consultancy Capital Economics said the outlook for the Malaysian economy became “less optimistic” this quarter, particularly in terms of consumer spending.

“A second wave of the virus and the reintroduction of many restrictions on movement reversed the strong recovery in home consumption in the third quarter. High-frequency Google mobility data suggests social distancing continues to weigh on activity,” a report said Tuesday.

But the other parts of the economy – like exports – should continue to perform strongly, so the macroeconomic success of the recent resurgence is likely to be “much less” than the previous wave, the economists said.

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