New York – It is now clear that COVID-19 has presented the global economy with an unprecedented challenge. In the United States and Europe, efforts to control the virus through lockdowns are likely to lead to the largest decline in economic activity since the Great Depression in the US and Europe. And while safeguarding human lives is imperative, the toll on human livelihoods will also undoubtedly be significant.
Asian nations, like others, are focused on this dual mission. In these early stages, it is difficult to quantify the economic impact. McKinsey simulations suggest that in some likely scenarios, real global GDP may decline by 4.9 percent to 6.2 percent from the fourth quarter of 2019 to the second quarter of 2020.2 The World Bank’s latest report paints a bleak picture: under a worst-case scenario, East Asian economies would contract by 0.5 percent, China’s projected growth would slow to 0.1 percent, and 11 million people across the region would be forced into poverty.3
It’s important to remember that this, above all, is a humanitarian challenge. Asia is home to 60 percent of the world’s population—and to around 35 percent of the world’s poorest people, according to 2019 World Bank data.4 Pandemics hit the most vulnerable hardest. Asia’s emerging areas, particularly India and the nations of Southeast Asia, face unprecedented risks.
Yet as a region, Asia has come through crises before and emerged stronger from them. We have reason to believe it can do so again. In a postpandemic world, can Asia’s nations and companies play a major role in defining the next normal?
Asia’s resilience to disruption
In 2018, McKinsey Global Institute research on developing economies around the world singled out 18 long-term and recent outperformers. Asia figures prominently on the list, with all seven of the economies that achieved or exceeded 3.5 percent real annual per capita GDP growth for the entire 50-year period of the study: mainland China, Hong Kong, Indonesia, Malaysia, Singapore, South Korea, and Thailand. Even countries hit hard by the 1997 Asian financial crisis returned to positive per capita GDP growth within a year or two. Having absorbed their lesson, they were better prepared for the 2008 global financial crisis. (McKinsey)