Research Briefing | Oct 20, 2021

APAC | Recovery Tracker points to stalling momentum

rb image for apac_recovery_tracker_points_to_stalling_momentum

Our new monthly Asia Pacific Recovery Tracker shows overall momentum stalling in recent months amid the Delta-driven surge in Covid cases and tightened mobility restrictions in many parts of the region. Our tracker monitors three categories – health, activity, and financial market conditions – to gauge the overall strength of the recovery across 13 APAC economies.

What you will learn from this report:

  • Recovery is proceeding at varying speeds across the region, with developing Asian economies showing encouraging signs of a pick-up as health conditions improve, particularly in India and Indonesia. Faster vaccine rollouts are bolstering recovery prospects, but those with low levels of vaccinations remain vulnerable.
  • Still, China’s slowing growth could drag on the region’s recovery. While a zero-Covid strategy has helped China to contain outbreaks, it has also disrupted activity. The fallout from Evergrande’s troubles, production cuts, and an energy crunch mean we are now more cautious about China’s growth outlook.
  • In developed Asia, Covid setbacks in Australia and Singapore will delay their recoveries, while South Korea’s recovery momentum has eased. However, Taiwan is set to rebound strongly after a Q2 slump, underpinned by the rapid containment of a Covid outbreak and sustained electronics demand.
  • As economies shift to Covid management rather than eradication, activity restrictions will likely ease further. This could lead to a surge in Covid cases as is the case in Singapore now, although the experience of the UK and Israel indicate that cases should ebb, enabling a more sustained-reopening. But until countries shift to a tolerance approach to the virus, we expect new outbreaks will continue to trigger restrictions and constraints on activity.
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