SINGAPORE – Southeast Asian countries are rushing to pick up parts after recording their worst economic functionality in decades in the current quarter of 2020. While some continue to register an alarming number of COVID-19 infections, they must now balance the containment of the virus. with economic stimulus and industry initiatives, while major stimulus measures are stretching public finances.
Southeast Asia is one of the fastest developing regions in the world before the pandemic, with an economy developing at about 5% each year. But strict border closures and border closures temporarily stifled personal consumption, public investment and tourism revenues, leading to deep contractions.
Malaysia’s gross domestic product fell by 17.1% year-on-year in the April-June quarter, while the Philippines fell by 16.5%, Singapore by 13.2% and Thailand by 12.2%, the worst effects in more than 20 years. Indonesia also recorded its worst figure since 1999, with a contraction of 5.3%, while Vietnam controlled a marginal accumulation of 0.4%, well below the 7% expansion clip observed before the crisis.
These figures place Southeast Asian countries among other primary economies. They did worse than China, which grew by 3.2%. They are for the contraction of 9.5% in the United States and also 9.9% in Japan. But they made a drop of more than 19% in France and 21.7% in the UK.
However, the sense of crisis in the Southeast Asian bloc may be greater. For years, these countries relied on the culmination of globalization: an influx of investments and incoming tourists. And in many cases, the monetary suitability of their governments is low.
“ASEAN is in a crisis like no other,” Lim Jock Hoi, secretary general of the Association of Southeast Asian Nations, once organized through the Tokyo-based ASEAN-Japan Center, said Thursday.
The immediate viral risk differs from country to country. Indonesia and the Philippines continue to report thousands of cases a day. Vietnam has been one of the successes of the pandemic, but has been dealing with a sudden wave since last month. Malaysia, which once recorded more than a hundred cases a day, maintained its one- or double-digit count.
“The worst is us,” Malaysia’s central bank governor Nor Shamsiah Yunus said on August 14.
But regardless of the level of the pandemic, ASEAN countries are pushing to restart at least some of the economic activity. Most have eased their blockades, adding the Philippines, which softened the measures in Manila and neighboring provinces on Wednesday. Thailand, which almost has contained the virus, promotes domestic tourism.
Borders are also gradually reopening. Singapore and Malaysia introduced a couple of reciprocal border crossing systems for key personnel and businesses on Monday, with the aim of boosting their interdependent economies. A handful of other “greenways” have been launched between key partners, such as Singapore and China, Indonesia and South Korea, which allow for business with restrictions.
The feeling in the region is that everything has to give way. ASEAN states have attempted their economies with stimulus packages of up to 20% of GDP, while prioritizing blockades and other efforts to prevent COVID-19. But that massive public spending can’t last long. Major rating agencies have already degraded the outlook for some Southeast Asian countries since the onset of the pandemic.
ASEAN countries “had a very strong macroeconomic stimulus, strong macroeconomic spending. So I think macroeconomic principles can be volatile at any time,” warned Fukunari Kimura, a professor at Keio University in Japan and a leading economist at the Jakarta Institute of Economics. Research for ASEAN. East Asia.
“We have to be careful.”
Experts say the creation of economic partnerships will be important for the long-term res upturn of the region. One of the objectives is the Global Regional Economic Partnership, or RCEP, a proposed flexible industrial pact that would surround the 10 ASEAN countries, China, Japan, South Korea, India, Australia and New Zealand.
The ministers of the RCEP participants will meet next week to advance the talks, following a series of ASEAN economy ministers and similar meetings scheduled from Saturday to Wednesday. “We expect the RCEP to be signed until the end of this year [and] we expect it to take effect immediately, which will be of great help to businesses and investor confidence in the time needed for recovery,” the ASEAN secretary said. General Lim. However, the participation of a major player, India, is in doubt, as New Delhi is reluctant to open up to foreign agricultural products that would compete with its own agricultural sector.
Meanwhile, Thailand was eager to subscribe to the Comprehensive and Progressive Trans-Pacific Partnership Agreement, the 11-member reorganized TPP, with no united States, Brunei, Malaysia, Singapore and Vietnam already on board. But after pro-TPP ministers left the Thai wardrobe in a reorganization in July and farmers continued to express their opposition, the club’s customers in Bangkok are unclear.
On the other hand, Singapore signed a virtual economy pact with Australia before this month, agreeing paintings in combination to expand synthetic intelligence and publicize customer protection online. The concept is that corporations take more advantage of expansion opportunities in the promising virtual area of the post-Pandemic era.
What this era will bring is still clear. Rising tensions between two of the bloc’s largest economic partners, the United States and China, threaten ASEAN. Friction can influence how and how Southeast Asia temporarily recovers.
China gets out of the pandemic faster than the rest of the world and can lead ASEAN countries to rely more on exports and investment from their larger neighbors. The U.S. presidential election in November can also replace the geopolitical landscape.
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