Thursday, 20 January, 2022

Asean-5 economic growth may fall short of IMF forecast: QNB

Asean-5 economic growth may fall short of IMF forecast: QNB

Popular News

WASHINGTON: The growth in Asean-5 economies is expected to be slower than forecast by the International Monetary Fund in their October World Economic Outlook, QNB has said in an economic commentary.

Since the outbreak of the pandemic, the majority of countries in emerging Asia had been able to overcome its effects better than the rest of the world in 2020 thanks to effective social distancing, contact tracing and border control measures, QNB said.

“Nevertheless, due to a slow start and progress of the vaccination roll out, this region was more vulnerable to new virus variants in 2021,” QNB said.

After the development of effective vaccines in late 2020 the pace of vaccination was remarkably rapid in advanced economies (AE), while the vaccine rollout was much slower in Asia, report agencies.

This, together with less monetary and fiscal policy space to stimulate their economies, caused headwinds to economic growth in Asean-5 countries to build during 2021.

The Association of Southeast Asian Nations Five (Asean-5) includes Indonesia, Malaysia, Thailand, the Philippines and Vietnam, representing the major emerging economies in Southeast Asia.

The emergence of the Delta variant caused a surge in new cases of Covid-19 within the Asean-5 countries. Fortunately, this forced ASEAN-5 countries to significantly ramp-up their vaccination campaigns. This, combined with lockdown measures and social distancing, has reduced new cases in Asean-5 countries from a peak of 153 per million people in August to less than 40 now.

QNB analysis has delved into three headwinds for the outlook for economic growth in Asean-5 countries: the emergence of the new Omicron variant, spillover from the slowdown in China and persistent supply chain constraints.

First, the number of new cases is likely to rise, given the low vaccination levels in some countries and the emergence of the new Omicron variant. Despite Asean-5 countries making significant progress with vaccination campaigns since July 2021, the region has administered far fewer vaccines than G7 countries.

Indeed, since the identification of the new Omicron variant at the end of last month, all Asean-5 countries have reintroduced stricter social distancing measures and tightened international entry requirements. Measures in Indonesia and the Philippines have been tightened by more than Malaysia and Thailand, likely because they have lower levels of vaccination.