Qatar – Asean-5’s economic growth could be lower than that of the IMF in October …

(MENAFN- Gulf Times)

* The Association of Five Southeast Asian Nations (Asean-5) includes Indonesia, Malaysia, Thailand, the Philippines and Vietnam, representing the major emerging economies in Southeast Asia.
The growth of the Asean-5 economies is expected to be slower than forecast by the International Monetary Fund in its October World Economic Outlook, QNB said in an economic commentary.
Since the start of the pandemic, the majority of countries in emerging Asia have been able to overcome its effects better than the rest of the world in 2020 thanks to effective measures of social distancing, contact tracing and border control, QNB said.
“Nonetheless, due to a slow start and the progress of the vaccination rollout, this region was more vulnerable to new viral variants in 2021,” QNB said.

After the development of effective vaccines in late 2020, the pace of vaccination was remarkably fast in advanced economies (EAs), while vaccine deployment was much slower in Asia.
This, combined with reduced monetary and fiscal room for maneuver to stimulate their economies, has created obstacles to economic growth in ASEAN-5 countries in 2021.
The Association of Five Southeast Asian Nations (Asean-5) includes Indonesia, Malaysia, Thailand, the Philippines and Vietnam, representing the major emerging economies in Southeast Asia.
The emergence of the Delta variant has caused an increase in the number of new cases of Covid-19 in Asean-5 countries. Fortunately, this forced the ASEAN-5 countries to dramatically step 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’s analysis looked at three headwinds for economic growth prospects in Asean-5 countries: the emergence of the new Omicron variant, the fallout from the slowdown in China, and the lingering constraints of the Supply Chain.
First, the number of new cases is likely to increase, given the low levels of vaccination in some countries and the emergence of the new Omicron variant. Although the Asean-5 countries have made significant progress in vaccination campaigns since July 2021, the region has administered significantly fewer vaccines than the 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 strengthened by more than in Malaysia and Thailand, possibly because they have lower immunization levels.
A resurgence of new cases would hamper economic growth in Asean-5, QNB noted. Countries may need to maintain stricter social distancing measures and / or stricter international entry requirements for longer.
“We predict that countries with low vaccination rates, like Indonesia and the Philippines, will be more vulnerable to the latest headwinds from Covid-19. “
Second, the slowdown in the Chinese economy is having an impact on the ASEAN-5 countries, as the reduction in exports to China negatively affects the region’s economy. Despite the recent easing of monetary policy, Chinese economic growth continues to slow after the withdrawal of fiscal stimulus by the Chinese authorities in late 2020 and early 2021.
The deleveraging of large real estate developers is also contributing to the economic slowdown. This translates into low demand in China for imports from ASEAN-5 countries. The exports of Malaysia and Vietnam are the hardest hit, as these two countries export more to China than their peers, relative to the size of their economies.
Malaysia’s and Vietnam’s exports to China represent 11% and 14% of GDP respectively, compared to only 3-6% in the other three ASEAN-5 countries.
Third, persistent supply constraints are a drag on the growth of the manufacturing sector, which is an important sector for ASEAN-5 countries. Long delivery times, labor shortages at factories and plant closings are contributing to persistent bottlenecks in the region.
Despite the onset of a gradual recovery in global supply chains, this disruption of Asean-5 industrial activity will act as a headwind for the economy as a whole. This, QNB said, will lead to lower investment and consumption via reduced profits and wages.
“Overall, headwinds from the likely increase in the number of new cases caused by the Omicron variant, the fallout from the Chinese economic slowdown, and persistent supply constraints are clouding the outlook for growth in countries. of Asean-5.
“As a result, we expect the growth of these economies to be slower than forecast by the International Monetary Fund in its October World Economic Outlook (2.9% in 2021 and 5.8% in 2022). ) “, noted QNB.

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