New Virus Surge Damages Recovery Prospects Again
Supply Chain, Exports Feeling the Impact
The Japan Center for Economic Research and Nikkei conducted the twenty-third quarterly consensus survey on Asian economies from September 3 to 23, collecting 39 answers from economists and analysts in the five biggest members of the Association of Southeast Asian Nations—Indonesia, Malaysia, the Philippines, Singapore, and Thailand—and in India.
A new surge of COVID-19 cases in the third quarter of 2021 damaged recovery prospects in most countries once again. The average growth rate of the five ASEAN countries in 2021 was 3.5%, down 0.6 points from the previous survey. That of India in fiscal 2021 (2021/2022) fell to 9.4%, down 0.3 points. On the other hand, there was some progress in vaccination compared to the second quarter. Singapore and Malaysia achieved a more than 70% vaccination rate, which compares well with developed countries. Differing vaccination rates among the six countries may influence economists’ views on their economic prospects.
Complicating the story, the COVID-19 pandemic now appears to be impacting not just consumption, but also production in each country. This could affect the exports which have supported Asian countries’ economic growth. Toyota Motor Corporation will reduce automobile production by 40~50% in September and October because of parts supply problems caused by COVID infections. Many Asian countries’ economies are supported by exports to the U.S., China, and other countries. As a special question in the September survey, we asked about the impact of COVID on the global supply chain.
The outcome of this survey was also reported at Nikkei Asia. (October 4, 2021)
◆ Main points of the survey
- A new surge of COVID-19 cases in the third quarter of 2021 once again damaged recovery prospects in most countries. The average growth rate of the five ASEAN countries in 2021 was 3.5%, down 0.6 points from the previous survey. That of India in fiscal 2021 (2021/2022) fell to 9.4 %, down 0.3 points.
- Thiland’s growth rate in 2021 was down 1.4 points to 0.5%, the sharpest downward revision behind Indonesia’s 0.6 points and Malaysia’s 0.3 points. Even Singapore’s rate fell by 0.1 point. Only the Philippines maintained its previous outlook, even though the country has struggled to contain COVID-19 and to roll out the vaccination.
- COVID shock has not only hurt consumption but has also begun to damage production in Asia. Outbreaks of cluster infections in some factories within ASEAN have led to global supply chain disruptions and damaged ASEAN exports.
- The U.S. Federal Reserve Bank’s move to taper quantitative easing is emerging as the second largest risk in some countries. Tapering may lead to an outflow of cash from Asia and cause Asian currencies to depreciate.
- China’s economy is now also perceived as one of the leading risks by some economists, as global investors are paying close attention to the financial problems of the real estate developer Evergrande.
Indonesia: Dendi Ramdani, head of industry and regional research department, Bank Mandiri; Umar Juoro, senior fellow, The Habibie Center; Wisnu Wardana, economist, PT Bank Danamon Indonesia Tbk.; Juniman, chief economist, Maybank Indonesia
Malaysia: Suhaimi Ilias, chief economist, Maybank Investment Bank; Wan Suhaimie bin Wan Mohd Saidie, head, economic research, Kenanga Investment Bank; Vincent Loo Yeong Hong, senior economist, KAF Research; Lee Heng Guie, executive director, Socio-Economic Research Centre (SERC)
Philippines: Jonathan Ravelas, chief market strategist, BDO Unibank Inc.; Pauline Revillas, research analyst, Metrobank; Emilio S. Neri Jr., vice president and lead economist, Bank of the Philippine Islands; Jojo Gonzales, managing director, Philippine Equity Partners Inc.; Carlo Asuncion, chief economist, Union Bank of the Philippines; Angela Hsieh, Regional economist, Director, Barclays Bank, Singapore
Singapore: Manu Bhaskaran, CEO, Centennial Asia Advisors; Randolph Tan, director, Centre for Applied Research, Singapore University of Social Sciences
Thailand: Panundorn Aruneeniramarn, assistant vice president, Siam Commercial Bank – Economic Intelligence Center; Lalita Thienprasiddhi, senior resercher, Kasikorn Research Center; Somprawin Manprasert, head of research division and chief economist, Bank of Ayudhya PCL; Shreya Sodhani, Regional Economist, Barclays Bank, Singapore; Amonthep Chawla, head of research, CIMB Thai Bank
India: Punit Srivastava, head of research, Daiwa Capital Markets India; Dharmakirti Joshi, chief economist, CRISIL; Tirthankar Patnaik, chief economist, National Stock Exchange of India; Jyoti Vij, deputy secretary general, the Federation of Indian Chambers of Commerce and Industry (FICCI); Bidisha Ganguly, Chief Economist, Confederation of Indian Industry; Rahul Bajoria, director, regional economist, Barclays Bank; Aurodeep Nandi, India Economist, Nomura India; Abihinav Tyagi, Research Associate, National Council of Applied Economic Research (NCAER)
For multiple countries: Euben Paracuelles, senior economist, Nomura Singapore; Nicholas Mapa, senior economist, ING Bank Philippines; Brian Tan, Regional economist, VP, Barclays Bank, Singapore
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