Asia-Pacific: recovery delayed but not derailed

The ASEAN-6 economies have seen a surge in Covid-19 cases since the start of 2021, which has led to the reinstatement of social distancing measures.

Thailand has recorded more than 120,000 cases since April compared to less than 7,000 in all in 2020. On the other end of the spectrum, Singapore and Vietnam had an average of 5 and 1.1 per million new cases per day in May, which is still very low regionally and globally. In the case

This has mitigated, but not derailed, the regional economic recovery; we have lowered our GDP growth forecast for 2021 to 4.9% (from 5.5% previously). We expect growth to improve to 6.5% in 2022 as countries move closer to collective immunity and the recovery becomes more synchronized across sectors.

After being praised on their successful containment of Covid-19 in 2020, the ASEAN-6 economies have seen an increase in the number of cases since the start of the year.

Daily new cases in Malaysia are currently above the peak reached in the first wave and an infection rate of over 235 cases per million at the time of writing is higher than in India.

But while the capacity of hospitals is increasingly limited, the humanitarian cost has not been so high.

We expect sequential GDP growth to be weaker in Q2 than in Q1 in most economies in the region, as tighter restrictions will hit already fragile sectors exposed to social distancing measures or household ‘social spending’. . Positively, world trade continues to recover, which gives some support to the region.

Assuming some restrictions are relaxed from June, we expect stronger sequential growth in the second half of the year. However, given the slow pace of vaccinations, with the exception of Singapore, we expect the recovery to be bumpy and the risk of further periods of heightened restrictions to remain. Rising uncertainty is also likely to lead to further economic scars.

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