Goldman Sachs: Asia’s economy is ‘best positioned’ to recover from the pandemic

Goldman Sachs on Monday said Asia is in the best position to recover from the impact of the coronavirus pandemic on the global economy. Asia will see a quick recovery because unlike the rest of the world it has successfully contained the virus and resumed manufacturing activities.

“We think Asia’s really the best positioned of the major regions right now, just given the good control of the virus in most of the region outside of India and some parts of Southeast Asia,” said Andrew Tilton, chief economist of the Asian region.

According to Tilton, consumer spending in China has been below par due to lack of stimulus measures, unlike the United States. But, China remains on track to quick economic recovery as a result of its “good control of domestic transmission of the virus” which has caused increased services activity.

Since the wake of the coronavirus pandemic global economies have been in despair as many businesses shut down and consumer spending drastically reduced. However, there has been a “reasonable momentum” among global economies as the struggle to get back to pre-COVID levels increases.

This momentum, as cited by Tilton, has placed purchasing managers’ indices in a better position compared to where they were a month ago, especially, that of the industrial sector. “We’re still reasonably upbeat on the recovery going into 2021,” he said.

The impact of the U.S. election

Tilton also cited the upcoming U.S. election as another reason why be believes Asia is best positioned for an economic recovery. He is of the opinion that if Democratic nominee Joe Biden eventually wins the presidential election it would have an effect on Washington’s tariff and trade policies. Adding that the new Washington stimulus measures could benefit Asia.

“Fiscal stimulus in the U.S. would have positive spillover effects in terms of growth to Asia,” Tilton said. “In an event where you got more fiscal stimulus – that would probably be better for the more expert oriented economies.”

While the next fiscal stimulus may be beneficial to Asia’s economy and similar economies, it is likely to happen unless lawmakers reach an agreement.

On Monday, the U.S. House of Representatives passed the new fiscal stimulus bill of $2.2 trillion. However, it is unlikely to get passed by the Senate before the presidential elections.

“In the event that we have a so-called blue wave – that is to say, Biden winning and unified Democratic control – we think the prospects in that scenario for a very large fiscal stimulus are probably bigger,” said Tilton.

Republican lawmakers believe that much spending is not needed to save the U.S. economy as too much money injected into the economy may soon backfire. On the other hand, Democrat lawmakers believe that much spending is just what the economy needs.