The Covid-19 recovery will be a slow and long-drawn process, but there are currently no signs of a double dip recession ahead for Asia ex Japan (AxJ), says a team of Morgan Stanley economists. This is despite a recent uptick in Covid-19 cases in the region, which has seen some retightening or extension of Covid-19 containment measures. 

“Hong Kong appears to be facing a third wave, and in China, daily new cases have picked up with the emergence of new clusters in Xinjiang and Dalian. Meanwhile, Covid-19 risks are still most significant in economies such as India, Indonesia and the Philippines, where daily new cases have continued to rise, with less discernible signs of having peaked,” note Tan Deyi, Zac Su, Jin Choi and Jonathan Cheung in a broker’s report issued on 4 August.

Nonetheless, the economists argue that the 2Q2020 has marked the trough in GDP performance for most of AxJ, which data shows largely came in April-May 2020. They expect 3Q2020 to be one of continued recovery for economies that have successfully dealt with Covid-19. July manufacturing Purchasing Managers’ Index (PMI) continued to rise in AxJ while AxJ export numbers through June remained constant, with South Korea’s export value and  volume recovering 93% and 95% respectively.  

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