Bounce-bank or slow economic growth: The future of Southeast Asian economies
As with almost every country in the world, the nations in Southeast Asia are looking for ways to recover from 2020’s economic downturn. As part of the annual China Conference: Southeast Asia held as a regional virtual conference, SCMP hosted a discussion panel to analyze whether Southeast Asian economies will bounce-back or slowly return to normal.
Moderator Maria Siow, SCMP’s Senior Correspondent for Asia, led the distinguished panel of economic experts. They were Professor Hans Genberg, Senior Director of Banking and Finance Programs and Professor of Economics for the Asia School of Business; Dr. Dan Fineman, Co-Head of Equity Strategy for the Asia Pacific for Credit Suisse; and Trinh Nguyen, Senior Economist in Emerging Asia for Natixis.
To figure out how quickly Southeast Asia can recover from the economic impacts of COVID-19, the panel first discussed the challenges facing the region.
With vaccine distribution just beginning, Southeast Asia is still combating the pandemic. Any economic solutions they wish to implement will need to go hand-in-hand with their continuing COVID-19 strategy.
The Asian Development Bank expects the region’s economic growth to rebound to 5.2 percent in 2021, but that will not return countries to where they were before the pandemic. To do that, they will need normalization.
Right now, economies are still in a state of disruption. For any country to fully recover, their primary goal should be to support normal economic activity as much as possible after vaccine rollout.
Southeast Asia, in particular, is facing two major challenges: international and domestic mobility.
Domestic mobility is primarily affected by a nation’s virus containment strategy, and the distribution of vaccines will help everyday workers and consumers return to normal. The sooner a country achieves herd immunity, the sooner they can allow their citizens to lessen COVID-19 safety measures.
While no one should completely stop practicing COVID-19 safety, as we do not yet know the virus’s long-term habits, herd immunity allows people to move about more freely and participate in everyday activities once again.
International mobility is perhaps the more significant challenge facing Southeast Asia. So many countries in the region depend upon exports and tourism, two industries severely disrupted by COVID-19.
For tourism to become a profitable industry once again, countries need to move in parallel with their vaccine rollout strategies. If one country has achieved herd immunity, but the other has not, people will not want to travel between them.
Exports, on the other hand, are typically dependent on other countries. As the world recovers from COVID-19, consumer demand will increase, leading to an increased need for exported goods.
While domestic mobility can return to normal as soon as vaccines are distributed, international mobility will require a global recovery. How quickly Southeast Asia recovers from 2020 depends on each country’s different economic infrastructure and the success of their vaccine distribution strategy.
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