It’s as if Asian economies are struggling just to make it from one quarter to the next. With countries coursing through second, third and fourth waves, albeit with brief periods of respite from coronavirus infections, economic rebound has never been closer and never further away.
Most Southeast Asian regions have enforced total or partial lockdowns and restrictions, which means respective annual GDP forecasts are often being revised mostly downwards and rarely upwards. Take Thailand’s central bank, which lowered 2021 GDP forecast to three per cent as against 3.2 per cent projected in December. As if on cue, Thailand’s Ministry of Finance too lowered estimates from 4.5 per cent to 2.8 per cent.
Similarly, the two-week lockdown of the Philippine capital last month may slow growth to 6-7 per cent, as per its central bank. The Philippines has set a 6.5-7.5 per cent target, recovering from last year’s record 9.5 per cent contraction. But latest data released Tuesday showed Q1 GDP shrinking 4.2 per cent, confirming fears that the economy will recover much slower than expected. It’s the fifth consecutive quarter of negative GDP growth — making it the longest recession in recent times.
But this is lower than Indonesia’s 0.7 per cent contraction in Q1. The IMF, which lowered its 2021 growth forecast, is far less optimistic than the Indonesian government. In April, it lowered growth estimates to 4.3 per cent, lower than the government’s projection of 4.5-5.3 per cent. The situation in Bangladesh is no different. The second wave and fresh lockdown is threatening to shave off growth, now estimated at 5.5-6 per cent, while the Bangladesh government for a second time lowered estimates to 6.1 per cent as against its initial forecast of 8.2 per cent.
The alarming Covid-19 outbreaks have forced much smaller countries to take hard decisions. While Laos saw its biggest jump in infections since the beginning of the pandemic last month prompting a two-week lockdown in the capital Vientiane, Cambodia locked down its capital Phnom Penh besides others — the impact of which will be visible in growth numbers.
The good news is, larger Asian peers seem to have broken the chain. While Japan, despite facing the fourth wave, anticipates a stronger economic recovery and has revised estimates upwards last month. Economy could now grow by 4 per cent, a notch higher than its previous forecast of 3.9 per cent made in January.
Ditto with South Korea. Its central bank Governor Lee Ju-yeol recently indicated that the ‘mid-three per cent’ growth was ‘very possible’, up from a previous forecast for three per cent growth. The IMF believes Singapore’s economy has been recovering since the middle of last year and even though its economy shrank 5.4 per cent last year after a record contraction in the first half, it now expects 4-6 per cent or more growth this year.