Coronavirus outbreak likely to hit Hong Kong, Thailand economies the hardest in Asia

Hong Kong and Thailand are likely to suffer most from the novel coronavirus outbreak because of close their economic ties with China

A drop in Chinese tourist arrivals and imports, as well as supply chain disruptions are likely to weigh on regional economy

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Thailand’s economy could be one of the most affected by the coronavirus outbreak due to its close ties with China, especially in the tourism sector. Photo: Bloomberg

Published: 6:30pm, 7 Feb 2020Updated: 1:07pm, 11 Feb 2020

Hong Kong and Thailand are likely to be the hardest hit Asian economies outside mainland China from the deadly coronavirus outbreak, according to analysts.

The 2019-nCoV, which had claimed the lives of nearly 640 people and infected more than 31,000 in mainland China by Friday, is viewed as even more damaging than the severe acute respiratory syndrome (Sars) epidemic in 2002-2003 because of prolonged factory closures and transport restrictions that have locked down many Chinese cities.

China has become more closely integrated with the rest of Asia since the Sars outbreak, meaning the disruptions to China’s industrial and export sectors, combined with a sharp drop in economic activity in the first quarter, will have significant repercussions across the region, particularly through tourism and trade, analysts said.

“A collapse in tourism arrivals from China will be the first shock wave for the rest of the region,” said Gareth Leather, senior Asia economist at Capital Economics. “Factory closures in China will affect the rest of the region by disrupting regional supply chains.”

A collapse in tourism arrivals from China will be the first shock wave for the rest of the region. Factory closures in China will affect the rest of the region by disrupting regional supply chains

Gareth Leather

Hong Kong would likely be the most affected because of its status as a trade hub, its tight linkages to the Chinese economy and the sharp decline in tourism expenditure that is expected, UBS economist William Deng noted.

“Due to the risk of infection, domestic households significantly reduced such activities as dining out, shopping and entertainment,” Deng wrote in a recent note. He cut Hong Kong’s gross domestic product (GDP) growth forecast to minus 1.8 per cent for 2020, against his previous projection of a 0.5 per cent drop.

A community outbreak spread by human-to-human transmission has started in the city, said Professor Yuen Kwok-yung, a top microbiologist at the University of Hong Kong on Wednesday.