Due to the COVID-19 outbreak, countries worldwide have struggled to contain the virus while also trying to revive the economy. Although some countries in Southeast Asia have successfully managed the spread of the virus, many fear that the economies still struggle.
According to Euben Paracuelles, despite some Southeast Asian countries being able to control the situation, they would still experience a “U-shaped recovery at best.” This statement means that in line with the success of a country in handling the pandemic, the numerous uncertainties worldwide would limit the overall recovery of an economy. Paracuelles is the chief Asian economist from the Japanese bank, Nomura.
When talking about a U-shaped recovery, it means that when a country’s economy goes downhill, it may stay that way for a long time due to different factors before its gradual rebound. Paracuelles also mentioned Thailand, one of the countries that have a good record of handling the pandemic. He says that while Thailand did an excellent job, they would still go through a “major drag,” especially in its tourism.
This problem in Thailand may stem from people not having the vaccine yet and having country borders and rules following strict traveling guidelines. Because the country solely relies on tourism to fuel its economic growth, the pandemic will have detrimental effects on Thailand as a whole, with a chance of losing about 9% of gross domestic products as reported by the United Nations Conference on Trade Development.
On the other hand, countries like the Philippines and Indonesia have continued to struggle ever since the outbreak. Being the most populous in Southeast Asia, both countries have shown massive economic downfalls. Indonesia reported an economic contraction, and the Philippines has a 16.5% year on year contraction.
According to Paracuelles, Indonesia may have difficulty in jumpstarting its economy, especially when government officials take too long to apply measures to control or lessen the pandemic effects. As for the Philippines, there is a greater need to address the coronavirus issue as soon as possible.
While the Philippines has already issued a lockdown on affected areas, recovery seems bleak and uncertain because of the further economic hit this move will make. Paracuelles says that if the country does not spend as much as the others, it may “lead to even more concerns, the business uncertainty will remain high, and therefore hampering any recovery.”