Risks to near-term economic performance are strongly tilted towards the downside for Asia-Pacific developing economies because of the coronavirus pandemic, unresolved trade tensions and limited monetary policy space, says a UN body.
The viral outbreak has severely affected global supply chains, international tourism, and financial and commodity markets.
Although the actual economic impact of the ongoing pandemic is unknown, it is likely to be significant, said the UN Economic and Social Commission for Asia and the Pacific (Escap) in its report titled "Economic and Social Survey of Asia and the Pacific 2020: Toward Sustainable Economies".
The contagion could cause global economic losses of US$900 billion-$2 trillion, depending on how government announcements change the focus from containment to mitigation of the impact through public health measures and how the situation evolves, according to the UN Conference on Trade and Development.
"Countries' own measures to contain the disease, such as quarantines, border closures and suspension of productive activities, will be disruptive for their economies, with potentially significant spillovers across borders," Escap said.
"The regional economic impact is anticipated to be greater than that experienced 17 years ago when Severe Acute Respiratory Syndrome (Sars) broke out. It is not only because of China's growing economic importance, but also because of increasingly globalised production structures."
Economic growth of developing countries in Asia-Pacific is forecast to grow at a slower pace of 3.7% this year, down from 4.3% logged in 2019, and pick up moderately to 4.3% in 2021.
In 2020, all the subregion countries are expected to observe a slowing or stagnant GDP growth rate.
For Thailand, real GDP growth is seen at 1.5% this year, down from 2.4% in 2019, before rising moderately to 2.5% growth in 2021, Escap said.
The unresolved trade tensions between China and the US and a potential further escalation could undermine business confidence and investments.
Although the two countries signed an initial trade agreement that could restore trade and business confidence to some extent, uncertainties over trade persist.
Notable pain points of the agreement include how most of the tariffs imposed remain in place, as well as the likelihood that the agreed trade targets are unrealistic because of expected shortfalls in US exports and China's ability to absorb a sudden increase in imports.