A lone passenger wearing a face mask to help curb the spread of the coronavirus stands with his luggage at the Suvarnabhumi airport in Bangkok, Thailand, July 21, 2021. (SAKCHAI LALIT / AP)
Prospects for Southeast Asia's economic recovery remain uncertain as the COVID-19 pandemic is expected to weigh on regional growth.
After a yearlong slump, three of ASEAN's biggest economies – Indonesia, Thailand and Malaysia – have posted positive growth rates in the second quarter. The Philippines, Vietnam and Singapore have likewise expanded during the same period.
ASEAN authorities, who are now battling the more infectious SARS-CoV-2 Delta variant, are depending on Chinese vaccines to support their mass inoculation programs. These will allow them to gradually lift lockdown measures, ease the strain on their public health systems and boost domestic consumption.
Thailand's GDP rose by 7.5 percent in the second quarter of this year, state economic planning agency the National Economic and Social Development Council reported on Aug 16. The figure beat market estimates of around 6.5 percent.
Indonesia's GDP rose by 7.07 percent – its strongest performance since 2004. Malaysian GDP grew by 16.1 percent.
Experts have pointed to the pace of vaccination as the key factor in determining the pace of an individual Southeast Asian economy's recovery. Thus far, the vaccine rollout across the region has been uneven
Despite the rosy figures, analysts have a less sanguine outlook on regional recovery.
READ MORE: Expo to fortify China-ASEAN trade ties
"ASEAN broadly remains in a battle with the more contagious Delta variant. Movement restrictions imposed to curb the virus are likely to weigh on economic activity for the time being," said economist Chua Han Teng of Singapore's DBS Bank.
Krystal Tan, an economist at the Melbourne-based ANZ Bank, said the growth outlook for the region is "very challenging given the virus resurgence, tightened restrictions and low vaccine coverage".
Tan expects Thailand's economy in particular to struggle more in the third quarter given the worsening pandemic and delayed recovery prospects for the tourism sector. The travel and tourism industry accounts for 20 percent of the country's GDP.
Thailand's NESDC has slashed its 2021 growth projection to a range of 0.7 to 1.2 percent from the previous 1.5 to 2.5 percent forecast. This is largely due to a new COVID-19 wave that has seen total infections spike to over 900,000 as of Aug 16, more than triple the number of cases from the end of June. The government has also decided to extend lockdown measures until the end of August.
Indonesia has extended movement restrictions until Aug 23 as daily COVID-19 cases remain high. As of Aug 16, the virus has infected over 3.87 million and killed more than 118,000 people in Indonesia, according to data from the World Health Organization.
Bank Negara Malaysia has downgraded this year's GDP forecast to between 3 and 4 percent from the previous forecast of between 6 percent and 7.5 percent. The country's central bank said the downgrade is due to the reimposition of nationwide containment measures.
Analysts have said that ASEAN's second-quarter growth is also mostly due to the low base effect and not indicative of a long-term trend.
"The year-on-year figures may look great, but they are a horrible distortion (of the current situation)," said Rob Carnell, head of research and chief economist for Asia-Pacific at Dutch investment bank ING.
Carnell said the second-quarter GDP figures in 2021 are compared against the second quarter of 2020, which is "a period of maximum contraction during the initial phase of this pandemic".
"It would be miraculous if the year on year figures were not strongly positive," he said.
ANZ's Tan agrees, saying "The positive growth rates in the second quarter were largely driven by low base effects from the first wave of the pandemic in 2020 and will not be sustainable as these effects fade."
She cited Malaysia's GDP – while the country posted double-digit growth on a year-on-year basis, its GDP contracted when measured on a per quarter basis. Malaysia's second-quarter GDP contracted by 1.9 percent compared with the first quarter of 2021.
Malaysia is reeling from one of the worst COVID-19 outbreaks in Asia, with more than 20,000 new cases detected on Aug 16, according to WHO data.
Experts have pointed to the pace of vaccination as the key factor in determining the pace of an individual Southeast Asian economy's recovery. Thus far, the vaccine rollout across the region has been uneven.
"Widespread vaccine coverage will pave the way for a broader reopening. On this front, Singapore and Malaysia have made the most progress and are better positioned to regain sequential momentum," Tan said.
Singapore, the region's finance and trade center, has fully vaccinated more than 70 percent of its population. This has encouraged the city-state's authorities to gradually ease social distancing measures.
In Malaysia, roughly half of its population has received at least one vaccine dose. The government is eyeing to gradually reopen the economy in the fourth quarter.
READ MORE: ASEAN countries set to bounce back from pandemic
Vaccinations in the Philippines, Indonesia and Thailand, however, remain sluggish.
Indonesia aims to inoculate 181.5 million people this year. As of Aug 16, over 28 million Indonesians have received two doses of COVID-19 vaccine.
The Philippines is aiming to vaccinate over 77 million people by year-end to achieve herd immunity. But only 12.56 million Filipinos have been fully vaccinated as of Aug 15.
Thailand aims to vaccinate 50 million people by October. As of Aug 15, only 5.03 million Thais are fully vaccinated.
Yang Han in Hong Kong contributed to this story.
prime@chinadailyapac.com