asean+3 regional economic outlook 2021 update
TRANSCRIPT
Hoe Ee Khor
Chief Economist
AREO 2021 Update
ASEAN+3 Regional Economic Outlook 2021 – Update
Recovering from Covid-19: Transitioning Smoothly From Pandemic to Endemic New Normal
October 7, 2021
Covid infections have declined in recent weeks
1Sources: Johns Hopkins University via Haver Analytics; and AMRO staff calculations.
ASEAN+3: Daily New Cases(7-day average; thousands of cases)
0
20
40
60
80
100
120
21-Jan-20 29-Mar-20 5-Jun-20 12-Aug-20 19-Oct-20 26-Dec-20 4-Mar-21 11-May-21 18-Jul-21 24-Sep-21
Japan
Malaysia
Philippines
Vietnam
Lao PDRBrunei Darussalam
Indonesia
Korea
Myanmar
Thailand
Cambodia
Singapore
Not visible:
Hong Kong, China
AMRO’s Covid Cycle shows an improving trend globally
2Notes: Data as of September 30, 2021. Minor outbreaks are classified as outbreaks in the bottom 75th percentile of a country’s 7-day average daily new cases or outbreaks with less than 15 daily new cases in a country’s 7-day average. Outbreaks can retroactively be reclassified as non-minor if a later date breaches the 75th percentile or 15-daily cases threshold.
ASEAN+3 and Selected Economies: Covid Cycle Heatmap(7-day average)
Sources: Haver Analytics, sourced from Johns Hopkins University; AMRO staff calculations.
First First-mid Mid Late End Reappearance/Minor outbreak
China 29
Hong Kong, China 5
Japan 1,365
Korea 2,216
Indonesia 1,543
Malaysia 14,358
Philippines 16,169
Singapore 2,397
Thailand 10,777
Brunei Darussalam 172.0
Cambodia 507
Lao PDR 440
Myanmar 1,478
Vietnam 6,844
Australia 2,127
Brazil 16,022
France 4,359
Germany 7,986
India 19,589
United Kingdom 38,657
United States 104,749
DECSEP JANNOV FEB MAR APR MAY JUN JUL AUG SEP
20212020
AUGJULJUN OCTJAN FEB MAR APR MAY
Daily new cases
(7-day average)
Vaccination rates are rising strongly
Selected Economies: Total Vaccines Administered
(Per 100 population)
Note: Data as of September 29, 2021.
Sources: Our World in Data via Haver Analytics; and AMRO staff calculations.
0 20 40 60 80
Vietnam
Myanmar
Indonesia
Philippines
Thailand
Lao PDR
Brunei Darussalam
Korea
Hong Kong, China
Japan
China
Malaysia
Cambodia
Singapore
AREO 2021 Current
Selected Economies and ASEAN+3: Fully Vaccinated Population(Percent of population)
0
40
80
120
160
1-Dec-20 11-Mar-21 19-Jun-21 27-Sep-21
Myanmar
Japan
Singapore
Malaysia
China
Cambodia
World
KoreaHong Kong
Philippines
Sources: Our World in Data via Haver Analytics; and AMRO staff calculations.
Brunei
Thailand
Indonesia
Vietnam
Lao PDR
3
Source: AMRO staff estimates.
Lo
w
Med
ium
Hig
h
Short Term (up to 2 years) Medium Term (2 to 5 years) Long Term (> 5 years)
Legend: Low impact Medium impact High impact
Sudden and
sharper-than-
expected Fed
tightening
Likelihood
Imminence
Sovereign
debt crisis
due to the
pandemic
Perennial Risks
Climate change
Natural
disasters
Cyber attacks
Geopolitics
Financial
crisis due to
the
pandemic
Financial
distress
among
businesses/
households
Global Risk Map (GRiM)
October 2021 (AREO 2021 Update)
Repeated
waves of
the
pandemic
Elevated trade
and tech
tensions
However, the pandemic still poses downside risks
4
Economic recovery remains uneven
Source: IHS Markit.
Note: The PMI headings are coded by colors. The deeper the red the further below (< 40) from the diffusion level of 50; greener denotes the further above (> 60) from 50. A PMI reading above 50 denotes an increase in business activity over previous month, and a reading below 50 denotes otherwise.
Manufacturing PMI(Seasonally adjusted; diffusion index)
5
Economy Change from
Prev Month
Global 0.0
Developed Markets -1.2
United States -0.3
United Kingdom -3.2
Eurozone -2.8
Emerging Markets 1.2
PLUS-3 0.1
China 0.7
Hong Kong* -1.6
Japan -1.2
Korea 1.3
ASEAN 5.5
Indonesia 8.5
Malaysia 4.7
Philippines 4.5
Singapore* 1.6
Thailand 0.6
Myanmar 4.6
Vietnam 0.0
2021
Jan to SepJan to Dec
20202019
Jan to Dec
Improvement in goods exports have outpaced services
ASEAN+3: Goods and Services Exports(Percent year-over-year; 3-month moving average)
Sources: National authorities via Haver Analytics; and AMRO staff calculations.
Selected ASEAN+3: Aggregate Tourist Arrivals (Millions of persons)
-20
-10
0
10
20
30
40
50
2018 2019 2020 2021
Goods (volume) Goods (USD)Services (USD, RHS)
-40
-20
0
20
40
60
80
100
Sources: National authorities via Haver Analytics; and AMRO staff calculations.
Note: Data include Cambodia, Hong Kong, Indonesia, Japan, Korea, Singapore, Thailand, and Vietnam.
0
5
10
15
20
Jan-18 Aug-18 Mar-19 Oct-19 May-20 Dec-20 Aug-21
100
150
200
250
300
350
400
Apr-20 Dec-20 Aug-21
Labor market conditions and corporate balance sheets have not yet recovered
Appreciation
0
2
4
6
8
10
Thailand Vietnam Japan Malaysia Korea Hong Kong Philippines
Pre-pandemic Pandemic peak Latest available
15.4
Unemployment Rate(Percent, seasonally-adjusted)
Sources: National authorities via Haver Analytics; and AMRO staff calculations.
Note: Pre-pandemic data refers to January 2020 for Japan, Korea, Hong Kong and Malaysia; and Q4-2019 for the Philippines and Vietnam. Pandemic peak refers to the maximum unemployment rate between February 2020 and March 2021. Latest data refers to July 2021 for Hong Kong and Korea; June 2021 for Japan and Malaysia; Q1-2021 for Thailand; and Q2-2021 for the Philippines and Vietnam.
7
0
10
20
30
40
70
201
9
202
0
202
1
201
9
202
0
202
1
201
9
202
0
202
1
201
9
202
0
202
1
201
9
202
0
202
1
201
9
202
0
202
1
201
9
202
0
202
1
201
9
202
0
202
1
201
9
202
0
202
1
201
9
202
0
202
1
CN HK ID JP KR MY PH SG TH VN
ST Debt LT Debt
Selected ASEAN+3: Debt‒at‒Risk of Listed Firms(Percent of GDP)
Sources: Bloomberg L.P.; national authorities via Haver Analytics; and Ho and Ong (forthcoming).
Note: The Debt-at-Risk ratios for 2021 are projected using actual data on the first half of 2021.
Sources: Sources:
Equity and debt flows remain volatile
Bloomberg Finance L.P. and AMRO staff calculations. National authorities via Haver Analytics; and AMRO staff calculations.
ASEAN-4 and Vietnam: Net Foreign Portfolio Capital Flows
(Billions of US dollars, as of September 30, 2021)
Equities Bonds
-2
-1
0
1
2
03-Jan-20 17-Apr-20 31-Jul-20 13-Nov-20 26-Feb-21 11-Jun-21 24-Sep-21
Indonesia Malaysia Philippines Thailand Vietnam
8
-16
-14
-12
-10
-8
-6
-4
-2
0
2
4
6
Jan-20 May-20 Sep-20 Jan-21 May-21 Sep-21
Indonesia Malaysia Thailand
Note: Flows data for Malaysia and Thailand for the month of September 2021 are unavailable.
Diverging trends in equity, bond and foreign exchange markets
Note: Figures in parentheses refer to returns since December 31, 2019. ASEAN-5 (average) is simple mean of returns since December 31, 2019 in benchmark equity indices of Indonesia, Philippines, Malaysia, Thailand and Singapore. Data as of September 30, 2021.
Note: Figures in parentheses refer to changes in 10-year government bond yields since December 31, 2019 in basis points (bp). ASEAN-5 (average) is the simple mean of changes since December 31, 2019 in 10-year government bond yields of Indonesia, Philippines, Malaysia, Thailand and Singapore in bp. Data as of September 30, 2021.
Sources: Bloomberg Finance L.P.
Note: Data as of September 30, 2021.
Feb-21
9
-45
-30
-15
0
15
30
45
60
Jan-20 May-20 Sep-20 Jan-21 May-21 Sep-21
CN (15.9) HK (-12.5)
KR (39.3) ASEAN-5 (average*)
-200
-150
-100
-50
0
50
100
Jan-20 May-20 Sep-20 Jan-21 May-21 Sep-21
CN (-27.7bp) HK (-53bp)
KR (53bp) ASEAN-5 (average*)
Selected ASEAN+3: Equity Market Indices
(Index, January 1, 2020 = 100)
Selected ASEAN+3: 10-year Government Bond Yields
(Basis point change)
Sources: Bloomberg Finance L.P. and AMRO staff calculations. Sources: Bloomberg Finance L.P. and AMRO staff calculations.
-20
-15
-10
-5
0
5
10
Jan 2020 Jun 2020 Nov 2020 Apr 2021 Sep 2021
Japan China Hong KongKorea Indonesia PhilippinesMalaysia Thailand Singapore
Appreciation
Selected ASEAN+3 Currencies against USD
(Percentage change from Dec 31, 2019)
Some economies are better placed to withdraw policy support
ASEAN+3: Vulnerability to Exit Risks, as of September 2021
Source: AMRO staff estimates.
Note: Ratings are assigned as follows: (1) red – weaker; (2) orange – less weak; (3) yellow – less strong; (4) green – stronger. The overall vulnerability rating is a simple average of the individual
ratings. “Healthcare capacity” refers to the availability of hospital beds and the quality of healthcare, the latter of which draws on AMRO staff judgment; “Size of domestic market” refers to the
economy’s import-adjusted GDP; “Economic diversity” refers to the relative size of key economic sectors (e.g., agriculture, manufacturing, services), overlaid by AMRO staff judgment about the
diversity of industries within each sector; “Remaining policy space” is based on the methodology presented in Poonpatpibul and others (2020); “Degree of policy support” is based on the extent of
actual policy support provided since the start of the pandemic assessed by AMRO staff; “Recovery rate” is proxied by AMRO staff’s projections of the output gap as of end-2021; “External buffers”
are the reserve coverage indicator based on the ERPD Matrix Scorecard percentile. BN = Brunei Darussalam; CN = China; HK = Hong Kong; ID = Indonesia; JP = Japan; KH = Cambodia; KR =
Korea; LA = Lao PDR; MY = Malaysia; MM = Myanmar; PH = Philippines; SG = Singapore; TH = Thailand; and VN = Vietnam.10
ASEAN+3 to grow by 6.1% in 2021 and 5.0% in 2022
Economy
Gross Domestic Product
(year-over-year)
Consumer Price Index
(year-over-year)
2020
(Actual)
AREO 2021
(March 2021)
AREO 2021 Update
(October 2021) 2020
(Actual)
AREO 2021
(March 2021)
AREO 2021 Update
(October 2021)
2021p 2022p 2021p 2022p 2021p 2022p 2021p 2022p
ASEAN+3 0.0 6.7 4.9 6.1 5.0 1.8 2.2 2.3 2.4 2.9
Plus-3 0.9 7.2 4.7 6.9 4.8 0.8 1.1 1.4 1.1 1.6
China 2.3 8.7 5.5 8.2 5.5 2.5 1.5 2.0 1.3 2.0
Hong Kong, China ‒6.1 4.8 6.5 6.5 4.0 0.3 2.0 2.0 1.7 2.0
Japan ‒4.6 2.7 1.8 2.6 2.4 0.0 ‒0.1 0.3 ‒0.5 0.4
Korea ‒0.9 3.2 3.0 3.9 3.0 0.5 1.0 1.3 1.9 1.9
ASEAN ‒3.3 4.9 5.7 2.7 5.8 2.1 2.6 2.6 3.0 3.5
Brunei Darussalam 1.1 3.1 4.0 2.1 3.2 1.9 1.2 1.0 1.6 1.0
Cambodia ‒3.1 4.7 6.1 2.8 6.6 2.9 3.5 2.4 3.3 2.3
Indonesia ‒2.1 4.9 5.3 3.8 5.6 2.0 2.5 3.0 1.6 2.7
Lao PDR 3.3 4.6 4.8 2.9 5.0 5.1 3.5 4.0 4.0 5.2
Malaysia ‒5.6 5.6 6.2 4.1 6.7 ‒1.1 2.0 2.2 2.5 2.2
Myanmar 3.2 ‒2.6 4.5 ‒18.7 0.0 5.8 5.0 5.5 6.7 12.4
The Philippines ‒9.6 6.9 7.8 4.3 6.7 2.6 3.8 3.3 4.3 3.2
Singapore ‒5.4 6.0 4.7 6.3 4.0 ‒0.2 0.5 0.7 1.6 1.3
Thailand ‒6.1 2.3 4.8 0.8 5.8 ‒0.8 0.8 0.9 0.8 1.0
Vietnam 2.9 7.0 6.8 2.6 7.5 3.2 3.2 3.2 3.2 3.2
ASEAN+3: AMRO Growth and Inflation Projections, 2021–22
Source: AMRO staff estimates.
Note: AREO = ASEAN+3 Regional Economic Outlook report. p = projections. Regional aggregates for growth are estimated using the weighted average of 2020 GDP on purchasing power parity basis; regional
aggregates for inflation are computed using simple averaging.
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• COVID-19 pandemic is receding across the region toward becoming endemic
• Rapid vaccinations and targeted containment measures should allow countries to open up safely in the endemic new normal
• Policy support should be phased out in a gradual and well-communicated manner to avoid cliff effects
• Targeted policy measures should continue to support the hard hit sectors, minimize scarring effects, and facilitate the transition to the new digital economy
• ASEAN+3 economies are gaining recovery momentum and are expected to grow strongly next year
Key messages
12
Thank you
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