With the number of coronavirus cases continuously ramping up across the globe, agitations over the prospect of the economic repercussion of the pandemic virus are increasing. The virus hailing from China and spilled quickly around the world, and the economic decline there from the COVID-19 outbreak will soon spread to the rest of Asia and the whole world.
According to the predictions of the ASEAN+3 Macroeconomic Research Office (AMRO), the COVID-19 epidemic could deduct as much as half a percentage point from the economic growth of some regional economies in 2020. The COVID-19 has had an impact on various industries such as tourism, flight suspensions, traveling, and other related industries. With this outbreak, all the international trades and outbound travels to China have been shunned to avoid the fear of contagion predicted to be engendered by the COVID-19.
According to a report published by Eastasiaforum, the contribution of tourism industries in the increment of the regional economies has been so far remarkable and has spread to almost every country since the early 2000s. In 2018, the tourism industry was estimated to have contributed more than 30 percent of Cambodia’s GDP, and more than 20 percent for Thailand and the Philippines. A downslide in the number of visitors to China and other virus-affected countries is thought to be detrimental for the ASEAN+3 region and will also affect the third world, especially for those countries largely dependent on tourism sectors and high volumes of Chinese visitors.
The epidemic is also affecting trade within the ASEAN+3 region, especially the Chinese manufacturing sector has been interdicted, because the demand for its products is hitting a stumbling block in the adjacent countries. India being one of the biggest importers of Chinese products as well as its political and economic rival is attracting the foreign direct investments and multinational companies, for example, recently the CEO of Amazon Jeff Bezos paid a visit to India and announced to invest $1 billion in digitizing small scale industries in India, Mr. Bezos promised further investment of $1 billion (over Rs7,000 crore) in India to help bring small and medium businesses on an online platform and committed to exporting $10 billion worth of India-made goods by 2025.
Followed by the US President Donald Trump’s recent visit to India which arguably switched on a red signal for the regional economic power China that is considered as a common threat for both the USA and India. The visit was wrapped up with agreements signed between the two countries, indicating that the USA will further its efforts to enhance military co-operation and intelligence sharing with India and to make better use of its military equipment. Both the countries have agreed upon the expansion of their military exercises, which now include the not-so-subtly named “Tiger Triumph”. Their navies can be even found sailing with the Filipinos and Japanese through the South China Sea.
Since the two greatest economies (USA & India) see china as a common geopolitical foe, on the other hand, Pakistan remained faithful to its all-weather ally China, nonetheless, Pakistan has so far played a cunning role in the region assuming that the USA bailout was all and all driven by eradicating the terrorist shelters across the Durand Line, but given the decline of the Russian role in the region and its so-called defeat in the middle east the eyes of the west is now on India, sidelining Pakistan given its rapid economic downslide and disillusionment between Pakistan and the USA over its double-faced game.
The question arises is, why India has become the focal point of the west? Because, the expansion of Chinese economic influence in the region and to the middle east oil facilities via Pakistan is presumably a detrimental threat to the USA economy, therefore India’s alliance with the USA is the best alternative because China poses threats to both India and USA. However, the outbreak of coronavirus is yet another major force, that has proven to be the biggest hindrance to the Chinese economy, yet many economic analysts are at the belief that, if the Chinese economy stumbles more than the expected rate at this time, or if the epidemic lasts longer and becomes more contagious than what the current estimates have suggested, the impact will spill over to the regional economies and will be more severe.
Skillful use of various economic policy folds by regional and global policymakers is more important at this critical juncture than ever, given that uncertainty about the epidemic is high and the risk of continuing contagion and a global economic slowdown is rising, as recently observed in Italy and Iran that have taken away thousands of lives, however, the Chinese government claims the outright demolish of the epidemic, still many adjacent countries have announced a lockdown, for example, in India, from March 15, all the institutions have been closed and since March 22, a public curfew was announced, followed by a long lockdown which will continue until March 31. If concerted actions are not taken, the ongoing disaster will last for a longer period which will lead to the global economic crises.
*Hamayun Khan is an MBA final Student at Punjab technical University, India.