Southeast Asian Economies Struggle Amid Contained Virus
Some Southeast Asian economies have successfully contained the coronavirus pandemic. However, global uncertainties will hinder their economic recovery, according to Euben Paracuelles Nomura’s economist.
The economist said the economy’s recovery was somewhat a U-shape recovery because of global uncertainty. He also thought the risks were still tilted to the downside.
An U-Shaped recovery means the economy spends a longer time at the bottom of the recession before it gradually rebounds.
The economist explained that even though Thailand appeared to contain the virus successfully, they would still experience a major drag from a slump in tourism.
He added that the slump in tourism is likely to persist. He believes until countries ease border controls or a vaccine becomes available – to enable people to travel again.
In July, the United Nations Conference on Trade and Development (UNCTAD) released a report naming Thailand as one of the countries that could suffer the largest economic hit from the slump of tourism.
According to the report, Thailand would lose 9% or close to $47.7 billion of GDP, and that’s the most optimistic scenario.
Paracuelles also noted that before the pandemic, the single main engine of Thailand’s economy was tourism and related sectors.
Without tourism, nothing else was going to boost the economy.
Meanwhile, Singapore has eased partial lockdowns for over a month. However, a renewed global coronavirus outbreak could threaten overseas demand for its goods and services, the economist said.
Singapore’s economy highly depends on external demand, given its small domestic market.
Some Countries Still Struggle with the Coronavirus Outbreak
The Philippines and Indonesia are the two most populous countries in Southeast Asia. Currently, they still struggle to contain local transmission of the virus.
On Wednesday, Indonesia reported its first economic contraction in more than 20 years after its second quarter. Its GDP shrunk by 5.3% from the previous year.
On Thursday, the Philippines posted a 16.5% year on year contraction, being its deepest hit on record.
Paracuelles also said that the Philippines’ move to tighten its lockdown in its capital city, Manila and neighboring provinces would further hit its economic activity.
According to the economist, both countries face a huge urgency to support their respective economies.
He also mentioned that the Philippine government had not spent as much compared to other countries in the region to boost the economy.
He warned that these countries needed to do it urgently. Otherwise, these nations may face more concerns. Business uncertainties remain high, therefore hampering recovery.
For Indonesia, he said the longer the government takes to control the outbreak, the harder it will be for stimulus measures to negate the economic hit.
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