Visitor, wearing face masks walk along the Jubilee Bridge in Singapore on Feb 17, 2020. (ROSLAN RAHMAN / AFP)

SHANGHAI/TOKYO - Japan and Singapore appeared to be on the brink of recession on Monday amid the novel coronavirus epidemic.

In Japan, virus-related damage to the economy is expected to show up in the current quarter, stoking fears of recession in the world’s third-largest economy which is already shrinking at the fastest pace since the second quarter of 2014.

Virus-related damage to Japan's economy is expected to show up in the current quarter

Japan’s gross domestic product (GDP) shrank an annualized 6.3 percent in the October-December period, government data showed, much faster than a median market forecast for a 3.7 percent drop and the first decline in five quarters.  

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Analysts say the widening fallout from the epidemic, which is damaging output and tourism, could undermine growth in the current quarter and push Japan into recession - defined as two straight quarters of decline.

“There’s a pretty good chance the economy will suffer another contraction in January-March. The virus will mainly hit inbound tourism and exports, but could also weigh on domestic consumption quite a lot,” said Taro Saito, executive research fellow at NLI Research Institute.

Economy Minister Yasutoshi Nishimura said the government was ready to take all necessary steps and was watching the impact the coronavirus outbreak could have on the economy and specifically tourism.

Bank of Japan Governor Haruhiko Kuroda said the central bank would consider additional rapid easing if the coronavirus outbreak significantly threatened Japan’s economy and price trends, the Sankei newspaper reported.

“We would need to consider monetary policy steps if (the virus outbreak) significantly affects Japan’s economy,” Kuroda was quoted as saying in an interview with the daily.

Chinese health authorities said Monday the total number of confirmed cases across the Chinese mainland rose by 2,048 to 70,548 as of the end of Sunday, with 1,770 deaths. In Hubei province, the epicenter of the epidemic, there were 1,933 new cases and 100 deaths on Sunday.

In Singapore, the Ministry of Trade & Industry downgraded its 2020 economic growth forecast to a range of -0.5 percent to 1.5 percent, compared with a previous estimate of 0.5 percent to 2.5 percent

Trade-dependent Singapore downgraded its 2020 economic growth forecast and is set to unveil measures to cushion the blow from the epidemic on Tuesday.

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Singapore's Ministry of Trade & Industry on Monday projected growth in a range of -0.5 percent to 1.5 percent in 2020, compared with a previous estimate of 0.5 percent to 2.5 percent. The baseline view is for expansion around the midpoint of 0.5 percent, it said, although the outlook is still unclear.

Singapore Prime Minister Lee Hsien Loong said on Friday that a recession was a possibility.

The city state, which has more than 70 cases of virus infections, is losing as many as 20,000 tourists a day amid travel curbs. DBS Group Holdings Ltd has already lowered its growth projection for this year to 0.9 percent from 1.4 percent previously.

Economists in a Bloomberg survey predict Singapore Finance Minister Heng Swee Keat will push the budget deficit to its widest in almost two decades in a budget due to be delivered Tuesday.

The Monetary Authority of Singapore, which uses the exchange rate as its main policy tool, is monitoring the situation closely and affirmed its policy stance remains unchanged, Deputy Managing Director Edward Robinson told reporters Monday. The MAS’s next scheduled policy decision is in April.

With Bloomberg inputs