Photo for illustration (Source: congthuong.vn)
The report said that overall, it expects Southeast Asia's GDP growth to contract by 4.2 percent in 2020. It added that the rebound in economic activity over the coming quarters in the region remains uncertain, particularly in the fourth quarter of 2020.
Specifically, economies which have convincingly contained the COVID-19 outbreak such as Thailand and Vietnam will see a stronger recovery than Indonesia and the Philippines, which are battling new waves of infections after restrictions were prematurely relaxed.
The report noted that both Indonesia and the Philippines remain highly vulnerable as they have weaker public health infrastructure, lower levels of fiscal support available, and are much more consumer driven than others in the region.
The pace of recovery in Indonesia is expected to be slow and household income will be squeezed. GDP is expected to contract 2.7 percent in 2020 before a 6.2 percent expansion in 2021. The Philippines is set to record the largest contraction in Southeast Asia, with its GDP falling 8.2 percent in 2020, because of its dependence on international tourism and a slow exit from lockdown.
Malaysia’s exports meanwhile are predicted to benefit from improving Chinese import demand and the electronics cycle. Nonetheless, the speed of its recovery will likely slow given the current sluggish global demand, high unemployment and weak investment, and its economy is forecast to shrink by 6 percent this year, followed by a growth of 6.6 percent in 2021.
Mark Billington, ICAEW regional director for Southeast Asia, said that the road to economic recovery in Southeast Asia will be long due to the tensions between the US and China, a long-term slowdown in global trade activity, and the potential of a prolonged COVID-19 pandemic./.