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Emerging Asian economies less affected by Covid-19 this year despite high daily cases: Deutsche Bank

Sharon See
Published Mon, Jul 19, 2021 · 05:29 PM

WHILE some emerging market (EM) Asian countries are experiencing relatively high Covid-19 daily infections, their economies are less affected by the pandemic compared with last year, according to a report by Deutsche Bank.

One reason is that current lockdown measures are very targeted and localised.

"Most EM Asia countries are export-oriented and are therefore ready to benefit from further recoveries in external demand, especially from reopening developed markets," said the bank's CIO Special report.

Meanwhile, income growth in the Asean-5 region is likely to be stunted by the pandemic, even as its economy continues to expand over the next two years.

The Asean-5 region - a grouping that consists of Indonesia, Malaysia, the Philippines, Singapore and Thailand - could see gross domestic product (GDP) grow 5.3 per cent this year and 5.6 per cent next year, according to the bank's forecast.

Even so, income per capita in the five economies is expected to be 6 per cent lower in 2024 than the level that was expected prior to the pandemic, based on estimates by the International Monetary Fund. The rate for the Philippines is set to be 12 per cent lower.

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"The key factor that will determine Asean economic recovery will be its vaccination rates," said the report.

In Indonesia, about 13 per cent of the population have received at least one dose, while the rate is 24 per cent in Malaysia.

Singapore is the only one in the region that has a vaccination rate comparable to countries in the European Union and the United States, with 38 per cent fully vaccinated, the report noted.

However, international trade continues to support South-east Asia's growth.

The region's exporters quickly benefited from a surge in demand for personal protective equipment (PPE), electronics, and other products due to an increased reliance on technology from working remotely, the report said.

This helped exports in South-east Asia recover beyond pre-pandemic levels by October 2020, while the outlook remains promising, it added.

"While the global demand for PPE will be less pronounced as economies globally slowly return to normality, there will be continued demand for electronics, software equipment and semi-conductors, as US and European consumers in particular start to spend their built-up savings," Deutsche Bank said.

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