Singapore, Vietnam see more V-shaped recovery in Asean

November 2, 2020

Maybank’s economists attributed Singapore and Vietnam’s more “V” recoveries to generous government subsidies, low interest rates, high household savings rate and work-from-home policies.

Singapore and Vietnam boast more faster-than-expected “V” recovery in Asean compared to the rest of the region, reported The Business Times (BT) in reference to a report by Maybank Kim Eng.

Maybank’s economists attributed these “V” recoveries to generous government subsidies, low-interest rates, high household savings rate and work-from-home policies.

In Singapore, property transactions for both private and public housing have increased to 40% above pre-pandemic levels. This is boosted by record-low mortgage rates and ample liquidity, they observed.

Singapore’s semiconductor production and exports also see a sharp “V” rebound, and container throughput has returned back to pre-pandemic levels. Sales of discretionary items such as recreational goods like watches have also recovered sharply in July.

Meanwhile, the only Asean-6 economy that escaped recession is Vietnam, as the country’s manufacturing purchasing managers’ index has risen significantly quicker and stronger than its Asean neighbours. Exports and retail sales saw a brief contraction, and have since normalised. The strong pick-up in domestic business and transport activities resulted in a “V” recovery in freight transport.

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In Malaysia, a V-shaped recovery is seen in semiconductor exports and production, as well as new motor vehicle sales.

Thailand’s most significant “V”s are in beer sales, home appliances sales and food exports. Soft “V”s are seen in car and motorcycle sales and credit card spending. Economists predict that Thailand will experience the deepest recession in Asean, with the economy contracting 7.2 in 2020. The current political situation with the student protests will further endanger the recovery, they added.

The high COVID-19 cases in Indonesia continue to plague the country’s economy, although palm oil, agricultural exports and domestic cement consumption have been recovering well.

Philippines had one of the stingiest and longest lockdowns in Asia, resulting in few “V” recovery pockets, according to the report. Despite offices in Manila still remaining closed, power demand saw a surprising sharp V-shaped rebound. The country’s overseas workers remittances saw a weak “V” as overseas Filipino workers may have resumed work with the reopening of their host economies.

Conversely, the industries that have benefited from the pandemic saw an “I”-shaped growth. These industries include supermarket, e-commerce sales, glove makers, pharmaceuticals and stock exchanges.

Malaysia and Thailand’s glove-making top the industry amid the global demand for personal protective equipment, while Singapore sees a surge in pharmaceutical manufacturing to meet the demands as governments and companies continue to stockpile supplies.

Asean’s recovery is expected to broaden in 2021, when a vaccine becomes available, according to the report.

“A vaccine will help improve domestic mobility and ease strict lockdowns and social distancing rules, a shift that will make a significant difference to the larger pandemic-hit domestic economies, particularly the Philippines and Indonesia,” the economists said.

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