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COVID-19 Seems To Be The “ACHILLES” Heel For Southeast Asian Economy

As Sean Darby says, who is from Jefferies, what is obstructing the recovery of many Southeast Asian economies is the failure to accommodate Covid-19 infections. In Indonesia, like the other “ASEAN” economies, it seems like they need to get a grip on the Covid-19 virus as Darby states, who is known to be the global head of equity strategy at the United States investment bank. He added that seems to be the Achilles heel at the moment, for the ASEAN economies, referring to the Association of Southeast Asian Nations regional grouping.¬†

COVID-19 Seems To Be The “ACHILLES” Heel For Southeast Asian Economy

A surge in the highly infectious, delta variant, triggered daily record highs in Indonesia, Malaysia, and Thailand, with regards to infections, in the past few weeks. Indonesia‚Äôs credit rating seems to be under pressure as the credit ratings of Southeast Asia’s economics were questioned since the surge in infections that occurred regionally.

COVID-19 Seems To Be The "ACHILLES" Heel For Southeast Asian Economy

On Monday, Indonesia was warned by Moody’s Investors Service that the resurgent Coronavirus infections in the country could undermine the credit rating of the country. Moody also stated in a report that a resurgence poses significant risks to the economic recovery of Indonesia, with more infectious mutations of the virus. Government plans will be challenged to reduce the fiscal deficit to the levels that were pre-pandemic, a credit negative.¬†

S&P Global Ratings, days earlier, was seen issuing similar comments about the warning in a July 15 report regarding Indonesia‚Äôs “Existing credit ratings shall be chipped away if the lockdowns that are ongoing are prolonged. Indonesia‚Äôs President, who is Joko Widodo, announced on Tuesday an extension of pandemic-related restrictions that are ready to end July 25th as per Reuters reported.¬†

Darby commented on Indonesia‚Äôs condition and said that Indonesia‚Äôs current situation has to be put into context. What is really good is that the country’s balance of payments position, he said, what are near record high is its foreign exchange reserves. Adding to that, the economy of Indonesia is also witnessing quite a genuine manufacturing revival.

Keeping Covid-19 in control is likely going to stand in the way of the country Indonesia reaching its full economic state, he said. The country is known to be lagging globally when it comes to its vaccination efforts, which is only 5.95% of the country’s population is known to be fully vaccinated, as per records of July 18th.¬†

Darby says that the reality is each of us is likely to not reach the complete economic state until we get to some form of herd immunity. Unfortunately, he added, the potential for the country Indonesia, to reach its pre-pandemic situation, is seen to be quite low at the current moment, given the rollout being poor, of the vaccine. Coronavirus guidelines are yet to be followed to avoid an outbreak as this outbreak could be much worse in comparison to what the world went through the last year. 

Key Points-

Goldman Sachs is known to slash its 2021 growth forecasts which are for massive Southeast Asian economies as the area grapples with a surge, renewed, in the Covid-19 infections. 

The highly contagious and transmissible strain of the Covid-19 has been spreading rapidly bringing alarming situations in almost most parts of the world. Recently the spread of this strain Delta has seen pushing the daily Covid-19 cases to higher records in Indonesia, Malaysia, and Thailand, in past few weeks. It is advised for citizens to continue following Covid-19 restriction guidelines which are marking up and social distancing. 

Singapore and Malaysia, reopening this year, while the rest of the Southeast Asian economies will reopen only in the first half of 2022, was something predicted by Goldman.

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