Output set to collapse, policy support likely to build

The downside risks to the global economy have now become reality and the effects of the coronavirus outbreak will cause output to fall sharply in Q2 and GDP across the region will contract this year. The virus has roiled financial markets, with currencies across the region among the major causalities and governments and central banks have taken action to mitigate the economic and financial fallout. We think that policy support will need to be stepped up over the coming weeks and months and the cost of the coronavirus outbreak means that fiscal positions will deteriorate sharply.