THE spread of the highly contagious Delta variant of COVID-19 has cast a shadow on Southeast Asia and limited economic recovery for the region in 2021, especially for countries with low levels of COVID-19 immunity.
According to the latest Global Economic Forecast Report from the Institute of Chartered Accountants in England and Wales (ICAEW) and Oxford Economics, the economies of several countries are expected to have contracted in the third quarter of this year although the outlook for the region in 2022 is more positive.
The report further predicted that economies with low immunity level face the greatest risks moving forward.
As the Delta variant triggers a renewed surged in COVID-19 cases worldwide, certain countries remain vulnerable to its impact due to having slower vaccination rollouts and higher exposure to global supply chain disruption.
“Asian economies have experienced varying degrees of success in containing the Delta variant, because of differing rates of vaccination and social distancing restrictions,” noted the report.
On one end of the spectrum, significant waves of infections in Vietnam, Malaysia, Philippines, and Thailand in the last quarter mean those countries face a delayed recovery in 2021 but they should see a significant rebound in 2022 once vaccination rates are higher and lockdowns are lifted.
On the other end, Singapore, Hong Kong, and China have recorded much lower cases.
Despite some fallout from the Delta variant which had resulted in tighter restrictions in 3Q 2021, the outlook for 2022 for these economies is robust, because of high vaccination rates and successful use of targeted restrictions.
The report further revealed that recovery prospects remain dim in the short-term for countries such as Vietnam, the Philippines and Thailand.
Heavily export-oriented economies like Vietnam remain dependent on the recovery of the manufacturing sector.
Nonetheless, Vietnam’s gross domestic product (GDP) is projected to grow by 5.4% (revised down from 7.6% in ICAEW’s last report) in 2021, before accelerating to 7.5% in 2022.
The pick-up in growth will be driven by restrictions easing and industrial recovery gaining traction around mid-2022, said the Global Economic Forecast Report.
In this regard, ICAEW managing director (international) Mark Billington noted that the COVID-19 Delta variant has derailed the recovery process for most Southeast Asian economies and the reality of living with COVID-19 as endemic is proving to be complex.
“Not only do governments have to implement appropriate restrictions and measures to curb the spread of the variant, but they also need to speed up their vaccination rollouts to achieve immunity, in order to improve their prospects for growth,” he remarked. – Sept 22, 2021
