ASEAN economies, three others affected by COVID-19
COVID-19 brings uncertainty to Asia, economically
MANILA – With the threats from COVID-19 pandemic still looming in the horizon, it has affected the global economy since February this year.
According to ASEAN+3 Macroeconomic Research Office (AMRO), ASEAN+3 governments took unprecedented processes to contain the transmission of the virus and keep their economies afloat. The prevailing economic conditions were highlighted in the August Update of the ASEAN+3 Regional Economic Outlook 2020 which was released today from Singapore.
The strict containment measures to prevent the virus from proliferating caused economies to a halt, causing widespread increases in unemployment, disruptions to businesses, and significant reduction in domestic demand. With the strict ban on international travel decimated the region’s huge tourism sector.
In a statement, AMRO+3 said the pandemic was well contained in the region as authorities have gradually started to open up their economies. Indicators show significant improvements in production and trade for some while high-frequency indicators of people movement manifest that activity in the region has been gradually recovering in recent weeks as containment measures are eased.
However, the gradual opening-up led to renewed outbreaks in several areas and authorities, like in the Philippines, had to adjust protocols.
“We expect a gradual U-shaped recovery in the ASEAN+3 region, led by China,” said Dr. Hoe Ee Khor, AMRO Chief Economist. He added regional growth is expected to slow sharply this year, to 0.1 percent, from 4.8 percent in 2019, before rebounding strongly to 6.0 percent in 2021.
He explained nine of the 14 ASEAN+3 members are expected to contract this year. Economies projected to record positive growth rates are China and the smaller ASEAN economies, Brunei Darussalam, Lao PDR, and Vietnam.
The growth trajectory as seen by AMRO+3 is anchored on the containment of COVID=19 virus, both regionally and globally. The resurgence in infections in several parts of the region and elsewhere have heightened caution about another series of lockdowns, which the ASEAN+3 economies cannot afford, though most still have fiscal and monetary space to provide support should it be needed.
“The biggest challenge facing ASEAN+3 policymakers in the second half of 2020 will be balancing the trade-off between easing restrictions to revive their economies and risking another wave of infections,” said Dr. Li Lian Ong, Group Head and Lead Specialist for Financial Surveillance and Acting Group Head for Regional Surveillance at AMRO. She added managing the exit from the raft of pandemic policies will be key to regional financial stability. (Melo M. Acuña)
Dr. Li Lian Ong, ASEAN+3 Macroeconomic Research Office Group Head and Lead Specialist for Financial Surveillance. (Screen Grab from ASEAN+3 Press Briefing)