China accounted for 14 per cent of Asean’s total exports and more than one-fifth of the region’s imports last year.

Thailand, which is heavily reliant on tourism especially from China, was thought to be the most affected as economists took one percentage point off the GDP growth forecast for this year.

Irvin Seah, an economist with DBS Group Holdings, credited the phase one deal with helping to relegate trade tensions to a secondary risk factor compared to the Covid-19 outbreak and predicted that growth forecasts would have been even lower if the survey had been sent out later.

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“It will definitely have some negative impact on the Singapore economy. We’ve seen it in 2015 and 2016 when oil prices plunged and that took a toll on Singapore’s economy,” Seah said.

The city state lost more than 5,200 manufacturing jobs in 2015 – 22 per cent more than the previous year – 1,680 of which were at companies producing fabricated metal products, machinery and equipment for oil rigs, among other things.

As Singapore is an important oil trading hub, falling prices will affect not only its energy sector but offshore marine and manufacturing clusters, Seah said, as “volatility creates higher risk and uncertainty for trading companies”.

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Nearly one-third of the 21 respondents to the monetary authority’s survey highlighted geopolitics as a potential downside for the economy, compared to one-eighth in December. Among the geopolitical risks cited were uncertainties arising from the outcome of the upcoming US elections.

But if the Covid-19 outbreak can be contained, most respondents said this would be a positive for Singapore’s growth outlook. Song Seng Wun, an economist with CIMB Private Banking, agreed that “virus fears are still the main driver of consumer and business sentiments”.

As of Tuesday, Singapore had reported 166 confirmed coronavirus patients, 93 of whom have recovered and been discharged from hospital.

Other key upsides highlighted by the survey include coordinated monetary easing by global central banks – with almost half of respondents citing this – and stronger than expected China growth, listed by more than one-third of respondents.

While DBS economists forecast Singapore’s 2020 growth to be 0.9 per cent, they said there was a risk of zero growth if the virus outbreak persisted and caused two quarters of global disruptions to “trade, travel, tourism, production, intermediate goods supply and sentiments”.

Thailand’s growth is estimated to be 2 per cent, with the DBS economists pointing to how the Covid-19 outbreak had resulted in tourist arrivals last month falling 44 per cent year-on-year. Tourism revenue accounts for 12 per cent of Thailand’s GDP and Chinese travellers make up a quarter of all tourism arrivals.

Malaysia, meanwhile, is facing the prospect of “a deep fiscal wound from the sudden slump in oil price, at a time when it has already been at the receiving end of impact from Covid-19 and the political squabble”, OCBC economist Wellian Wiranto wrote.

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He was referring to the collapse of the Pakatan Harapan government and the resignation of ex-leader Mahathir Mohamad that left the country without ministers for about a week before Prime Minister Muhyiddin Yassin announced his cabinet on Monday.

Malaysia is heavily reliant on oil and gas revenue, with that accounting for one-fifth of the 2020 budget. Wiranto said if oil price averaged at US$32 per barrel for the year, it would translate to a US$4.2 billion drop in oil revenue, or 1.1 per cent of GDP.

The government would then have to adjust expenditure or see the deficit pick up from 3.4 per cent to 4.5 per cent of GDP. This would leave little room for further fiscal relief for the Covid-19 outbreak, he said.

“High fiscal deficit remains a bugbear for investors … At most, the fiscal deficit can be pushed to 3.6 to 3.8 per cent of GDP, depending on the severity of global situation, before the ratings agencies balk,” he said. DBS revised its 2020 growth outlook for Malaysia from 4.6 per cent to 4 per cent.

On Wednesday, Singapore’s Finance Minister Heng Swee Keat told local media the government was working on a second stimulus package and would not rule out turning to the reserves for funds.

The first package to help health care, households and businesses – worth S$6.4 billion – was announced on February 18.

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Asian markets were mixed on Wednesday after rebounding from declines across the board on Monday. Volatility is to be expected, analysts said, given fears that the coronavirus spread across the US and Europe will worsen.

Indonesia’s stock exchange tightened trading-halt rules on Tuesday to curb market volatility, Bloomberg reported. Foreign investors have dumped Indonesian assets and its currency has become Asia’s worst performer in the past month, leading to its central bank intervening in the market to stabilise the rupiah. The government has also pledged to unveil a second stimulus package to support some industries.