Morgan Stanley sees virus dragging growth for most of Asia in 2Q

Bloomberg reports that according to Morgan Stanley, most Asian economies will suffer their biggest blow from coronavirus containment measures in the second quarter of the year, even as the worst seems to have passed already for China.

Asia excluding Japan will see two consecutive quarters of contraction -- the technical definition of a recession -- as lockdowns and social-distancing norms are still being tightened or extended in countries where infections have yet to peak, economists including Deyi Tan wrote in a note.

For example, India, Malaysia, and the Philippines have extended lockdowns in their countries, Indonesia has expanded social-distancing norms to the greater Jakarta area and Singapore has stepped up enforcement of its "circuit-breaker" measures over the past two weeks.

Economic output in Asia ex-Japan will shrink by 1% in the second quarter, Morgan Stanley estimates, projecting that nine of 10 economies it tracks in the region will contract from April to June. If China is removed from the calculation too, the region's economies will shrink 3.8% in the second quarter, the bank estimates.

China, which suffered its first contraction in decades in the first quarter, will grow by 1.5% in the second quarter, the report said.