• Risks for APAC firmly tilted to the downside, including from much weaker European and American economies than currently assumed
• Forecast of 4.8% growth for China assumes slow resumption of economic activity and weak export demand

Moody's Investors Service has revised its forecasts for most APAC economies on coronavirus implications, incorporating ongoing travel restrictions and heightened containment measures, as well as the recent oil price shocks.

"Our baseline scenario assumes declining consumption levels and continuing disruptions to production and supply chains in the first half of 2020, followed by a recovery in the second half of the year," says Christian de Guzman, a Moody's Senior Vice President.

"In the short run, this is playing out as both negative supply and demand shocks, and the longer the disruptions last, the greater the risk of a global recession," adds de Guzman.

Rising infection rates would further impede global sentiment, heightening asset price volatility and tightening financing conditions, which could snowball into a deeper economic contraction.

A number of governments have already announced measures to cope with the impact of the coronavirus, and Moody's expects there will be more fiscal stimulus as the extent of the economic fallout becomes clearer. However, some governments – mainly frontier markets – may be constrained by their high indebtedness and limited access to funding.