Unemployment rates across Asia-Pacific could rise by well over 3 percentage points as social distancing measures implemented to contain rapid spread of coronavirus hit the engine of job creation, S&P Global Ratings said on Monday.
Stating that jobs are at the core of the current economic crisis, S&P said that as household incomes fall, consumer spending and tax revenues suffer. Borrowers are less likely to repay their debts. Job seekers lose skills and become discouraged.
"Policymakers know this. Hence, the remarkable efforts to encourage firms to keep workers on the payroll," it said.
The service sector has become the most important employer across the Asia-Pacific region. Out of every 100 workers in the region, 55 on an average work in services.
"The unfortunate truth about jobs in almost every economy in the world is that they are easily lost but hard to win back. The more jobs that are lost today, the slower will be the recovery," S&P said.
S&P Global ratings Chief Economist (Asia Pacific) Shaun Roache said the rise in unemployment could be larger now than in previous cycles because the downturn is much larger and is concentrated in the services sector.
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"Unemployment rates could surge by well over 3 percentage points, or more than twice as much as the average recession, as social-distancing measures hit the engine of job creation across Asia-Pacific," said the report tiled 'Jobs And The Climb Back From COVID-19'.
S&P has already revised Asia-Pacific growth forecast in 2020 to 0.3 per cent with China at 1.2 per cent, India at 1.8 per cent, and Japan at (-)3.6 per cent.