It has already been two years since the coronavirus pandemic hit the region’s economy, yet there are no signs that this crisis will abate in the immediate future. Partially this could be contributed to the adoption of a so-called zero-Covid policy that uses lockdowns to combat any small coronavirus resuscitation. The question then becomes, will living with the virus help to put the economy back on track?
According to virologists, the virus is endemic, meaning that it will continue to circulate in pockets of the global population for years to come. In other words, the world needs to learn to live with it, as eradication is not the answer.
A Nature survey suggests that the future will depend heavily on the type of immunity people acquire through infection or vaccination and how the virus evolves. There is a belief that in zero-Covid regions there will be a continuous risk of disease outbreaks. The good news is that this could be quenched quickly by herd immunity if most people have been vaccinated.
On the other hand, we are talking about people’s lives. Shifting to the “living with the virus” strategy for China, for example, could potentially mean hundreds of thousands if not millions of lethal cases. Thus the authorities are faced with a difficult choice – save human lives or help the economy.
So far, the vast majority of Asian countries have opted for the first and apparently, they have done better at controlling the virus than the UK and US. Still, in terms of economic perspectives, it is forecast that the Asia-Pacific region will continue to underperform the US and Europe.
To be more precise, S&P Global Ratings recently lowered its China growth forecast to 4.9% in 2022, from 5.1% earlier, and lowered the 2023 growth forecast to 4.9% from 5.0% earlier. South Asia is forecast to grow 8.6% in 2021, compared with September’s forecast of 8.8%.
It is hoped tha improvement in the region’s vaccination coverage and economic reopening will continue to gain momentum, thus helping the economy recover. The only problem is that besides the pandemic risks, the most important country of the Asian region – China – constantly faces attacks from Western governments.
In particular, recently it became known that the European Union will impose extra tariffs on aluminum foil coming from the Middle Kingdom. The justification is that producers benefited from excessive and unfair subsidies.
How will this affect the economic growth of the region? Only time will tell but it looks as though the People’s Bank of China will be forced once again to ease its monetary policy.