In Asia, the whole business landscape has been dramatically redefined by the economic effect of COVID-19. Few, if any, economies escaped unaffected by the pandemic. But, in a region so closely linked to China and the epicentre of the outbreak, business owners and operators were among the first to confront the challenges of life under lockdown.

Western nations arguably had the benefit of time to see how their respective economies could be affected. In Asia, however, policies were made and decisions taken with no reference point to shape the thinking. As such, Asian businesses had to adapt quickly. Where hopes had been high amid the backdrop of economic growth, there are now fears for what comes next.

The impact of the pandemic on Asian economies

In the first instance, COVID-19 had far-reaching public health implications for business owners and their employees. From an economic perspective, however, the World Bank says the impact is triple-pronged: the actual pandemic, the impact of lockdown restrictions and what is next on the horizon as a global recession looms – if, indeed, it hasn’t already started to take root.

As the pandemic ebbs and flows in its spread in individual countries, global markets are seeing considerable volatility. From stock indices to foreign currency exchange, traders are seeking to make sense of what national restrictions mean. Even within Asia itself, the impact of COVID-19 – and future prospects – are not consistent and risks an uneven playing field for businesses.

What does the future hold for Asian businesses?

Part of the reason for this difference in fortunes owes much to the speed at which countries are able to exit lockdown. China and Vietnam, for example, adopted a much more robust in dealing with the outbreak. And, as such, the International Monetary Fund expects China to report 1.9% growth this year. In south-east Asia, meanwhile, it is Vietnam with the brightest prospects.

In contrast, countries such as the Philippines are grappling with painful economic contractions – thought to be as much as 8.2% in 2020. It is due to the slow exit from lockdown in part. But it also owes much to the nation’s dependence on global tourism. And that is another key factor to consider. In the absence of overseas visitors, many tourist industries are now turning inwards.

The path to economy recovery heading into 2021

The road to recovery may seem long for Asian businesses. But the predictions are encouraging. For emerging and developing Asia, the World Bank is projecting growth of 8% in 2021 – that is two-and-a-half percentage points above actual growth figures for 2019. Of course, there will be some nations for whom this growth only covers the losses incurred this year.

Any step in the right direction, however, is to be welcomed.

Optimism might be in limited supply in the short-term. Research from Facebook, however, does show some level of confidence among small- and medium-sized enterprises in Asia. Almost half of all regional SMEs feel upbeat about the future – especially those in countries where, in actual fact, economic contraction has been the harshest.

There are, of course, challenges still for Asian businesses to face. From a drop-off in demand to cashflow concerns, the ability to bounce back from COVID-19 is going to depend on some fairly pressing external factors. The most significant of these is the relaxation or removal of lockdown restrictions – but there will also be pressure on governments to support of those who need it.