24 Jul 2020
Posted in Business Fundamentals
Major APAC economies to recover marginally in second half of 2020 with unlocking initiatives, says GlobalData
Major Asia-Pacific (APAC) countries have been partially successful in containing the spread of the contagious COVID-19 and had started opening up the economies in phases. Since mid-May 2020, partial restoration of business activities had resulted in a slowdown in the intensity of job losses and recovery is expected to gain momentum during the remaining part of 2020, says GlobalData, a leading data and analytics company.
New Zealand became the first country in the world to become COVID-19 free in June 2020 and all mobility restrictions were subsequently lifted. However, mobility for retail and recreation is still 2% below the baseline (mobility during 3rd January – 6th February 2020), according to the Google Mobility Tracker.
Vietnam, one of the best performers in terms of containing the virus spread, has been able to completely open up the economy. Its mobility levels have ameliorated in June and July as compared to April 2020 when restrictions were foisted. Nevertheless, movement of individuals remains lower than normal. Vietnam had a prudent and prime policy response that has been developed for almost past two decades and was implemented as soon as the threat was detected. South Korea, Thailand and Malaysia have also regained much of its lost mobility, though full recovery is yet to be achieved.
Kausani Basak, Economic Research Analyst at GlobalData, states: “It is evident from the present scenario, even though restrictions have been eased in the countries with low transmission rate, individuals are heedful to the suggested precautionary measures. Meanwhile, reopening of international borders have led to an influx of workers and students into the countries who can possibly add to the number of imported COVID-19 cases.”
Vietnam’s ability to re-instate greater mobility is reflected in its retail sales of consumer goods and services which increased by 5.3% YoY in June 2020. South Korea’s retail sales also reflected a rise of 1.7% YoY. The recovery in consumption in these countries is the flagbearer of the expected economic recovery and uptick in employment as reflected in the Purchasing Managers’ Index (PMI), manufacturing. However, China’s retail expenditure continued to contract (1.8% YoY in June 2020), though at a slower pace as compared to March and April 2020 (15.8% and 7.8% YoY respectively).
In Thailand, even though retail and recreation activity has increased, its transport mobility still remains substantially below the baseline. Comparatively, India, Pakistan and Bangladesh showed prolonged barriers to mobility in retail, parks, transit and work because the countries are still suffering from high COVID-19 positive cases on a daily basis.
A relaxation in social distancing has seen spikes in number of cases in many pockets across the APAC region. Indian cities of Bangalore and Pune, Manila in the Philippines, Hong Kong and Melbourne in Australia have had to resort to stricter measures in July 2020 to arrest the spread of the disease and have decreased mobility in these areas.
Basak concludes: “Countries in the region are taking steps to revert to normal operations at a varied pace. On the flip side, alleviating restrictions prematurely will bring about exponential rise in positive COVID-19 cases and place undue burden on the healthcare system. In this case, the cost to welfare of citizens will exceed the expected economic loss from the lockdown, as seen in India and Pakistan. Hence, greater public cognizance of the preventive measures and effective quarantine/testing policy along with effective implementation of the same is of paramount importance.”