Covid hits parts of Asia harder than the start of the pandemic

SINGAPORE – Southeast Asia saw a sharp rise in Covid-19 cases last month that showed few signs of slowing down, and the situation is expected to delay most of the region’s economic recovery.

Major economies in this part of the world, including Indonesia, Malaysia, Singapore, Thailand, Vietnam and the Philippines, saw a sharp increase in daily reported cases and deaths from the disease in July.

Information compiled by the online publication Our World In Data showed, based on a seven-day moving average, that Malaysia recorded 515.88 confirmed Covid infections per million people on July 31. This number has steadily increased since June 30, when it was around 180.85.

Behind Malaysia was Thailand with 236.02 new cases per million population on July 31, followed by Indonesia with 147.20 cases even as it imposed a partial lockdown and stepped up contact tracing efforts and quarantine. In total, Indonesia recorded more than 1.2 million new cases in July.

Vietnam, the Philippines and Singapore also saw an increase in the number of new daily cases per million population, but the numbers were lower than the other three countries.

Bank of America in a research note last week said its calculations showed the region’s average daily case count rose 162% last month to a new record high of 72,200, as daily deaths tripled from 500 per day to 1,500 people on average.

Indonesia and Malaysia recorded the highest death rates per million population in July, according to the bank.

The situation has forced governments in Southeast Asia to reintroduce containment measures and social restrictions in a bid to slow the spread, with some running out of hospital beds, medical equipment and hospital supplies. oxygen.

The highly contagious delta variant has also been detected in the region, adding to concerns over transmission limitation and complicating plans to reopen. Prolonged shutdowns can be extremely costly and damaging, especially in countries like Indonesia where there is a large informal sector and where many people earn a daily wage.

Closures and social restrictions are likely to affect economic activity in the region. Experts say the impact is expected to be more pronounced in countries with tighter restrictions, including Malaysia, Vietnam and Indonesia.

This could potentially affect the region’s manufacturing sector, which generally tends to be low-tech and labor-intensive, making it more vulnerable to disruption from a pandemic.

Bank of America economists in a separate note last week said recent foreclosure measures in Southeast Asian economies “have started to wreak havoc on factory output.” They pointed to a decline in the Manufacturing Purchasing Managers Index, or PMI – a measure of factory activity – in places like Thailand, Indonesia, Malaysia and Vietnam.

Data provided to CNBC by IHS Markit showed manufacturing PMI readings for Indonesia, Malaysia, Thailand and Vietnam remained below 50 in July, indicating a contraction in factory activity.

“Although the impact of the lockdown on ASEAN’s PMI this time was not as large as in April 2020, the magnitude is already close to a negative shock of 4 standard deviations,” wrote Bank of America economists, adding that the consequences were already greater than what they had seen in India during its devastating second wave.

Australian bank ANZ lowered the GDP growth forecast for the six major Southeast Asian economies from 4.6% to 3.9% for 2021. For 2022, the forecast remained unchanged at 5.4%.

The deterioration excludes Singapore where growth indicators remain in line with expectations despite movement restrictions, according to Sanjay Mathur, chief economist for Southeast Asia and India at ANZ.

“In others, the latest wave of the pandemic and the resulting intensification of restrictions have caused substantial damage to the recovery,” Mathur wrote, highlighting the decline in consumer confidence, the excessive slack in the food industries. services and the decreasing effectiveness of expansionary fiscal and monetary policies. Strategies.

He pointed to two new issues that could further delay growth prospects: on the one hand, the slowdown in factory activity and, on the other hand, the slowdown in growth in China.

The vaccination rate in Southeast Asia differs from country to country. Information from Our World In Data showed that Malaysia and Singapore administered comparatively more daily doses per 100 people on a seven-day moving average than the others.

Singapore fully vaccinated nearly 58% of its population by the end of July, while Malaysia’s fully vaccinated population stood at around 21.02%.

Indonesia, the most populous country in the region, had only fully vaccinated 7.51% of its population as of July 31.

Bank of America has predicted that most countries in Southeast Asia could potentially achieve herd immunity by the first three months of 2022 if they step up their vaccination rates. Collective immunity occurs when a disease no longer spreads quickly because most of the population is immune after vaccination or infection.

– CNBC Nate rattner contributed to this report.