Covid resurgence in Japan, South Korea could hit Asia’s economic recovery

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

Tomohiro Ohsumi | Getty Images

SINGAPORE — As 2020 draws to a close, many investors consider Asia as the region with one of the best economic prospects next year thanks to its relatively better control of the coronavirus outbreak.

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

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

To be sure, daily reported cases in many parts of Asia — where the virus first hit — remain lower compared with those in Europe and the U.S., data compiled by Johns Hopkins University showed.

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

But some countries are now battling a resurgence far worse than what they experienced earlier in the pandemic. Even territories that had major successes in containing the virus may not be spared, with Taiwan this week reporting its first locally transmitted case since April 12 — underscoring the difficulty in eradicating Covid.  

Here’s a look at the Asian economies battling a renewed surge in coronavirus infections and how that would affect their economic outlook.


Economists from Pantheon Macroeconomics wrote in a Wednesday report that the Japanese government’s “relatively soft” social-distancing rules have not appeared to work, and that could result in tougher measures in the coming months.

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

South Korea

  • Covid-19 tally: 53,533 cumulative confirmed cases and 756 deaths as of Wednesday, according to Hopkins data.

Like Japan, South Korea’s daily new cases this month reached levels not seen before — surpassing 1,000 for the first time since the outbreak.

But unlike in Japan, the government has taken a tougher stance in South Korea in response to the fresh wave of Covid cases.

The government on Tuesday announced a nationwide ban on gathering of five or more people, and ordered tourist attractions — such as ski slopes and other winter sports facilities — to close, reported Yonhap News Agency.

Taking that step would allow the bulk of South Korea’s economic damage to be contained mostly in the fourth quarter of this year, according to Pantheon Macroeconomics.


Economists from consultancy Capital Economics said the outlook for the Malaysian economy has turned “less upbeat” this quarter, particularly on the private consumption front.

“A second wave of the virus and the reimposition of many restrictions to movement will have sent Q3’s strong rebound in private consumption into reverse. The high-frequency Google mobility data suggest social distancing remains a drag on activity,” they said in a Tuesday report.

But the other parts of the economy — such as exports — should continue to perform strongly, so the overall economic hit from the latest resurgence will likely be “much smaller” than the previous wave, said the economists.

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