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SE Asia - Strong Growth Prospects

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Whilst 2020 was undoubtedly a troublesome year to forget, the strong economic and/or defensive, anti-pandemic protective measures adopted by most of the ASEAN region looks certain to herald a significantly brighter prospect for 2021. Whilst not universal by any means (the recent coup in Myanmar is a likely exception), a combination of falling Covid-19 fatalities, a ramp up of vaccine distribution and pro-business incentives rolled out by regional Governments looks set to sharply reverse the negative growth of 2020. Indeed, markedly so, with some estimates of an encouraging 6% V-shaped recovery. According to data research firm, GlobalData, Vietnam is expected to lead the way with a positive growth of 8.5% led by strong manufacturing and services growth.

Singapore undoubtedly leads the way in terms of stimulus packages designed to promote local and regional trade and industry whilst also fueling domestic growth via a series of infrastructure projects (estimated value of S$90bn), as announced in its recent annual budget that also offered S$11bn in various relief measures. With tight Covid control measures as well as similar fiscal and economic packages being tabled around the region, Singapore is not alone in boosting its growth prospects. Furthermore, a relief on tariffs and ongoing support from distant trading partners, notably ANZ, Japan and Korea, is also likely to promote an uptick. Sectors that appear to benefit most over the medium- and long-term are likely to include a combination of traditional sectors, such as manufacturing, construction, travel (particularly if so-called ‘Green Channels strengthen across the region), brick and mortar retail and the continued growth of Life Science, E-Commerce and logistics, FinTech and IT&T.

The caveat, of course, is the uncertainty surrounding new aggressive strains of the virus and the long-term efficacy of the vaccines as well as the global roll-out cycle time. However, after a dark 2020, rays of hope should be warmly welcomed.