Malaysia, Philippines among Southeast Asian economies struggling amid coronavirus resurgence

12-May-2021 Intellasia | South China Morning Post | 5:02 AM Print This Post

The Philippine and Malaysian economies continued contracting in the first three months of the year, adding to signs that some of Southeast Asia’s biggest nations are struggling amid a resurgence in coronavirus cases.

The quarterly figures released on Tuesday which came in below all forecasts for the Philippines add to recent weaker signals from top regional economies Indonesia and Thailand.

All four countries have faced a surge of Covid-19 cases in recent weeks, part of the broader challenge across Asia’s developing economies to stem a renewed outbreak, particularly in India.

Among Southeast Asia’s biggest economies, only Singapore and Vietnam, which have been able to mostly contain the virus, have shown year-on-year expansions in the first quarter.

Philippine gross domestic product contracted 4.2 per cent, compared to the median 3.2 per cent drop expected in a Bloomberg survey. Malaysia shrank 0.5 per cent compared with a 0.9 per cent estimate. Indonesia last week reported a 0.74 per cent contraction, against an expected decline of 0.65 per cent. Thailand, which is expected to show a contraction when it reports first quarter figures next week, recently lowered its full-year outlook, with the finance ministry citing poor tourism activity.

The Philippines is expected to manage one of Southeast Asia’s slowest recoveries this year. A return to stricter curbs in Manila and other key economic areas threatens the government’s goal of at least 6.5 per cent growth this year, which is up for review. It is also expected to drive unemployment, which has yet to show considerable improvement.

Malaysia’s GDP on Tuesday release came a day after prime minister Muhyiddin Yassin announced nationwide movement restrictions to stem the latest surge in cases. Moving forward, the economy will continue to benefit from strong external demand and improving domestic conditions, the central bank’s governor said in a briefing.

Bank Negara Malaysia (BNM) said the economic recovery will benefit from better global demand, increased public and private sector spending and continued policy support in the months ahead.

“We expect GDP growth to remain within the projected 6 per cent to 7.5 per cent this year,” BNM Governor Nor Shamsiah Mohd Yunus told a virtual news conference.

Exports jumped 18.2 per cent in the first quarter driven by demand for semiconductor shipments for work-from-home products and medical devices, the figures showed.

Strong external demand provided a boost for the manufacturing sector, which grew 6.6 per cent from a year earlier.

The government’s decision to allow major economic sectors to continue operating during a limited lockdown in the first quarter was a key factor behind Malaysia’s better-than-expected performance over the period, said Alex Holmes, Asia economist with Capital Economics.

“That said, the outlook has deteriorated again recently, with a rebound in cases leading to the reimposition of restrictions. As such, private consumption is likely to remain in the doldrums this quarter,” Holmes said in a note.

Indonesia, the region’s biggest economy, expects to grow this quarter at the fastest pace since 2008 as the government turns to fresh stimulus programmes to lift domestic demand.

Thailand’s finance ministry, the first of the nation’s agencies to revise its outlook, last month cut its economic growth forecast for the second time this year as the country grapples with its biggest virus outbreak of the pandemic.


Category: Malaysia, Philippines

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