Coronavirus outbreak to drag China’s Q1 GDP growth lower – ANZ

Asia macro weekly report from the Australia and New Zealand Banking Group (ANZ) highlights coronavirus fears. In doing so, analysts at ANZ expect the epidemic to weigh on the Asian growth and global financial markets as well.

Key quotes

We expect the outbreak to drag China’s Q1 GDP growth lower by 0.9ppt. This will trim GDP growth in Asia ex-China and India by 0.5ppt in Q1 2020, mainly through the tourism and trade channels between China and the region.

A temporary decrease in Chinese visitors will have the most notable growth impact on Hong Kong and Thailand.

India and Indonesia will be the least affected, given the small contribution that the tourism sector makes to their economies, and the low share of visitors from China.

A disruption in China’s industrial activity will reduce its import demand across the region temporarily.

We find Taiwan and Vietnam most exposed in terms of the potential impact on growth via the trade channel.

Three central banks — the Bank of Thailand (BoT), the Reserve Bank of India (RBI), and the Bangko Sentral ng Pilipinas (BSP) — have monetary policy meetings next week. We expect the BoT to cut while the RBI and BSP will keep rates on hold.

Indonesia, South Korea, the Philippines and Thailand are due to publish inflation numbers for January, which we expect to have crept higher in the region. 

Indonesia will also publish Q4 GDP growth data next Thursday, 6 February. 

China and Taiwan will report January trade figures next Friday, 7 February. We expect a marginal drop during the holiday-shortened month.