Morgan Stanley, an investment bank and a retail broker based in New York, has just released a study on countries in Asia that would likely recover fastest. The research entitled “Which Economy Emerges First on the Path to Recovery”. In this research, Morgan Stanley divides the recovery of Asian countries into 4 group categories, starting from the fastest to the slowest. The first group is China, which is predicted to be the first Asian country (outside Japan) whose economy will recover to the Gross Domestic Product (GDP) rate as per pre-Covid-19, which will be in the third quarter of 2020. China has domestic demand oriented economy.
The ease of ongoing policies is predicted to fasten its economic recovery. The second group belongs to the Philippines, Indonesia, and India which are predicted to get lower impact of global recession due to high structural growth driven by domestic sector. These three countries can get back to the pre-Covid-19 level just after China. However, there are some risks for those countries where Covid-19 does not reach its peak in the second quarter of 2020. When this happens, this second group will be behind the third group in recovery time. Further, the third group consists of South Korea and Taiwan.
The economy of these two countries is export-oriented and will get global recession impact. Nevertheless, institutional response of these countries to the domestic handling of Covid-19 is very effective and some improving domestic demand indicators may fasten their economic recovery. The last group or the fourth one includes Thailand, Malaysia, Hong Kong, and Singapore. Some countries in this group have export-oriented economy and considered the biggest in Asia (excluding Japan). And some countries implemented lockdown policy that could lead them to a double hit on export and domestic demand. Morgan Stanley sees that this group might need longer recovery period, predicted to be in the first quarter of 2021. Their economic growth tends to decrease.