Receding daily COVID-19 cases, rollout of vaccines, increased spending by the governments along with easing of monetary restrictions will help revive the Association of Southeast Asian Nations (ASEAN*) economies in 2021 with their real GDP forecasted to rise by 6%, says GlobalData, a leading data and analytics company.
Despite the contraction in real GDP in 2020 amid the lockdown restrictions due to the pandemic, ASEAN countries are expected to witness a sharp V-shaped recovery in 2021. From mid-September 2020, most of the ASEAN countries exhibited a declining trend of COVID-19 cases. The fatality rate declined to 2.7% in Indonesia, followed by the Philippines (2.1%), Malaysia (0.4%), Thailand (0.3%), and Singapore (0%) as of February 2021.
Gargi Rao, Economic Research Analyst at GlobalData, says: “Due to the implementation of non-tariff measures on essential goods among the ASEAN nations, trade is expected to increase in 2021. Trade windows are set to open for ASEAN nations with the signing of Regional Comprehensive Economic Cooperation (RCEP) in November 2020, which will further spur economic integration.
Furthermore, the continuous support from Australia and New Zealand will help ASEAN nations to construct a comprehensive regional development plan to address the ongoing COVID-19 challenges, and other transboundary issues, thereby posting a sharp recovery in H2 2021.”
The six largest ASEAN nations (Indonesia, Malaysia, the Philippines, Singapore, Thailand and Vietnam) are expected to witness positive real GDP growth rates in 2021. With continued expansion of trade and gradual recovery in tourism sector and construction activities, Singapore’s GDP growth is forecasted to increase to 5.8% in 2021. Similarly, Malaysia is set to witness a growth of 7.1% in 2021, an uptick from -5.2% in 2020.
GlobalData forecasts Vietnam to be the fastest growing economy with a real GDP growth of 8.5% in 2021. Vietnam’s growing trade with the EU and its robust fiscal policies have helped the economy to witness an uptick in manufacturing and service sectors growth.
According to GlobalData, year-on-year (Y-o-Y %) retail trade growth increased from 8.5% in November 2020 to 9.4% in 2020. A strong demand, effective vaccine rollouts and resilient supply chains have put the economy on a faster recovery path.
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The government is expected to draw on S$53.7 billion (US$40 billion) from its reserves for this year and an additional S24 billion (US$17.8 billion) over the next three years to assist local companies transition into a post-pandemic business environment.
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