Light behind the Covid cloud
Even as several countries, notably India and Southeast Asian nations, are struggling to contain a new Covid-19 wave, Asia appears on course for an economic revival on the back of a healthy global recovery and early progress on vaccines.
The region's growth is forecast to rebound to 7.3% this year, albeit from the low base of last year, when gross domestic product contracted by 0.2%, according to the Asian Development Bank. Growth will moderate next year to 5.3%, it said last week.
Excluding high-income newly industrialised economies -- Hong Kong, China, South Korea, Singapore and Taiwan -- growth is forecast at 7.7% this year and 5.6% for next year.
The trade-dependent economies of Southeast Asia will also recover, with expansion of 4.4% this year and 5.1% in 2022, after contracting 4.0% in 2020.
The forecast for Central Asia is for 3.4% expansion this year and 4.0% in 2022. Pacific economies, still affected by travel restrictions and a tourism collapse, will post modest growth of 1.4%, before improving to 3.8% next year.
The ADB attributes the growth to rising exports in developing Asia amid strengthening global economic activity, including a rebound in manufacturing. Progress on vaccine production and delivery has also contributed to the momentum.
Thanks to strong exports and gradually improving household consumption, economic activity in China will be particularly brisk. GDP growth is targeted at 8.1% in 2021 and 5.5% next year. East Asia is expected see 7.4% growth this year and 5.1% in 2022.
The ADB forecasts the Indian economy will grow 11% in the 2021 fiscal year 2021 that ends on March 31 next year, followed 7% in fiscal 2022, amid a strong vaccine drive. That could change, of course, in light of the catastrophic surge in Covid cases and deaths.
The ADB has acknowledged that the pandemic remains the biggest risk as potential delays in vaccine rollouts or significant new outbreaks could undermine growth. Other risks include geopolitical tensions, production bottlenecks, tightening financial conditions, and long-term scarring, for instance, learning losses due to school closures.
Fitch Ratings is also seeing improving prospects for the regional economy. It projects growth in Asia and the Pacific rebounding to 7.2% after last year's contraction of 0.9%, underpinned by continued momentum in China.
But the pandemic continues to challenge the outlook, Fitch warned, highlighting that renewed surge in India, where it had been forecasting 12.8% GDP growth in fiscal 2021. Vaccination programmes offer potential relief, "but progress has mostly been slow in Asia Pacific".
For now, India is dealing with problems on a massive scale, having reported a global single-day record of 379,257 new cases on Thursday, and a one-day record for deaths as well.
Thailand also saw five consecutive days with more than 2,000 cases before the figures fell below 2,000 on Thursday and Friday. And there is lingering public anger over the government's failure to contain the third wave, which originated in nightspots frequented by wealthy movers and shakers in business, politics and entertainment.
In its latest attempt to curb the spread, the Covid-19 taskforce has imposed new restrictions including a ban on gatherings of more than 20 people in Bangkok and five other provinces for the next two weeks. Movements in and out of these provinces are discouraged, and restaurants are back to offering takeout only.
The mandatory quarantine period for visitors from abroad is once more at 14 days, after a brief experiment with a 10-day period in Phuket, where authorities are hoping against hope hat they can start welcoming vaccinated foreign visitors by July 1.
Cases are also high in Malaysia, with daily infections exceeding 2,000 since mid-April before topping 3,000 last Wednesday. Cumulative cases in the Philippines surpassed 1 million on April 26, when nearly 9,000 new infections were reported. President Rodrigo Duterte has imposed stricter lockdown measures on Metro Manila and four nearby provinces, covering 24 million people.
The surge in infections has been attributed to the easing of restrictions and movements of people during long holidays in the case of Thailand and Malaysia. Policy flip-flops also caused public confusion about how to comply, and concerns over side effects have left some people hesitant about getting vaccinated.
Inevitably, the threat of recurrent Covid outbreaks will cast a pall over the economy and our mental health. For some countries, the worst may not be over yet. Clear messages and strict enforcement by authorities in charge are absolutely critical in my view.
For individuals, maintaining social distancing and mask wearing are strongly recommended for your own safety and that of society. Be patient and good luck everyone.