World economy may take ‘up to 3 years to recover’

The global economy is likely to take another two or three years to recover with no let-up in sight in the coronavirus pandemic, said Dar Wong, vice-president of the ASEAN-China Commerce Association.

The recovery period, he said, would be similar to those of the past two world financial crises.

Speaking on the sidelines of a webinar panel discussion entitled “Getting your business ready in a post-COVID world” on Wednesday, Wong said the abrupt halt in the global economy this time is quite different from those of the previous two.

“The 1997 Asian financial crisis was triggered by the rapid depreciation of Asian currencies. The collapse came so rapidly — in just one or two weeks — and it took about three years to recover.

“And, the 2008 financial tsunami erupted in the United States. The entire market collapsed and its impact spread badly to Europe, then to Asia. It took about two years to recover through quantitative easing policies,” he said.

But, unlike 1997 or 2008, today’s impact on the market and the economic recession did not come from any currency devaluation, collapse of bonds or corporate debt. It’s caused by an enemy that’s likely to linger for a longer time. The adverse impact has clouded the economic outlook of the whole world, said Wong.

He believes the faster governments act to curb the outbreak, the faster the recovery.

“Asian countries have all done a relatively good job. When their governments implement social distancing policies to contain the spread of the virus, residents tend to follow,” he said.

According to Wong, Hong Kong, Singapore and South Korea should recover faster in Asia as their population is smaller.

However, several Asian countries and regions are battling a resurgence of the coronavirus. Vietnam warned on Wednesday that every city risks increased infections while Hong Kong has implemented its toughest social distancing measures to date amid a third wave of COVID-19.

According to the Hong Kong Census and Statistics Department, the city’s gross domestic product slumped 9 percent in the second quarter of this year in real terms from a year ago, compared with a 9.1 percent fall in the first three months of 2020.

Wong — a global markets specialist with 30 years’ experience — said investors should focus on three sectors in the present circumstances — the biomedical and healthcare industry, the 5G-technology sector and waste management.

He urged people to embrace the transformation to a new working style and business model. Given the worldwide travel restrictions, they need to move their businesses online to avoid being hard hit again in a similar crisis in future.

“Everything can now be done online, including the way they communicate, present a business or try to promote a product,” he said.

edithlu@chinadailyhk.com