Economic Performance in ASEAN-6 during COVID-19 in 2020

Posted on 19 May 2021

ASEAN economies have been badly impacted by the COVID-19 pandemic. Many restrictions have been imposed by the governments in order to control the situation. This has caused severe contractions in many economic sectors, including the service and manufacturing sectors. 

Indonesia’s economy was slowly recovering in the second half of 2020 as many sectors and activities re-open as well as from the massive policy support from the government.

It is expected that GDP growth rate slowed down at 2.07% in 2020 and will pick up at 5% in 2021. Information and communication as well as real estate sectors remained positive in 2020 while transportation and warehousing sector was badly hit with a decline of two digit rate at 15%. This was the result of the restrictions in logistics and mobility during the COVID-19 pandemic. Other sectors, such as mining, manufacturing and construction registered a decline of one digit growth rates of 2-3% in 2020.

The construction market is expected to resume its growth in mid-2021, with a gradual recovery starting in the third quarter of the year. It is predicted that construction sector will pick up positively, with a growth of 5.2% in 2021.

Automotive production declined more than a third and sales dropped 40% in the first half of 2020. In total, vehicle production dropped by half to 690,000 units in the year. It is expected that the sector will recover in 2021. Production will pick up 70% to 1.18 million units, which is still lower than the level in 2021. 

Malaysia’s economy was also hit hard, especially in the second quarter of 2020. GDP contracted 5.6% in 2020 and is expected to rebound by 6.5%-7.5% in 2021. There are many factors showing recovery signs in the fourth quarter of 2020. 

The manufacturing sector recovered in the second quarter of 2020, especially the sectors that relied on exports. It is expected that the manufacturing and service sectors will grow 7% in 2021. The construction sector will pick up from a decline of 19% in 2020 to a positive growth rate of 13.9% in 2021. 

Vehicle production dropped 15% in 2020. It is forecasted that the sector will recover at 8% in 2021 and 6% in 2022, fueled by Sales and Service Tax exemption effect, which allows buyers of locally-assembled (CKD) cars to be exempted from paying the 10% sales tax upon purchase and new model launches from Proton and Perodua. 

Philippines’ economy contracted by 10% in the first three quarters of 2020. Despite the relaxing of restrictions, the economy in the fourth quarter of 2020 continued to decline 8.3% y-o-y, mainly due to weaker household consumption and unemployment rates. In total, economy in 2020 dropped by 9.5%. 

The contraction was caused by the sharp dive in private domestic demand and the decline in trade due to the strict measures during the COVID-19. The government targeted that economy will pick up at 6.5%-7.5% in 2021. 

Before COVID-19, the construction sector in Philippines was the fastest growing in the Asia-Pacific region. However, the sector contracted 9.2% in 2020. In the second quarter alone, the sector dropped as much as 33.5% as construction activities were disrupted due to the lockdown measures. The government announced that they will review the Build Build Build programme and still targets to complete the work in 2021 despite the COVID-19 pandemic. As such, construction sector is expected to bounce back at an average growth rate of 8.3% till 2024. 

Singapore’s economy contracted 5.4% in 2020, which is slightly better than the official contraction forecast of 6-6.5%. Sectors most affected were travel-related, food & retail service and sectors with high reliance on foreign workers. 

Manufacturing sector grew 7.3% in 2020, compared to a negative 1.5% in 2019, owing to the growth in the electronics, biomedical manufacturing and precision engineering clusters.

Construction demand decreased by 37% to S$20 billion as construction companies grapple with the lack for manpower during the outbreak. It is expected that construction demand will pick up on the sustained activities for both private and public projects, at around S$23-28 billion in 2021. 

Thailand’s overall GDP growth in 2020 dropped 6.1%. This was a result of a sharp drop in second and third quarters. However, many indicators show recovery signs in the fourth quarter of 2020. Private consumption expenditures expand from -6.7% in the second quarter and -0.6% in the third quarter to positive 0.9% in the fourth quarter. Export in USD for agriculture products picked up to be positive growth rate at 10.2% in the fourth quarter. It is expected that the country’s economy will pick up at 2.5%-3.5% in 2021. 

Construction sector was badly hit in the fourth quarter of 2020 and the first quarter of 2021. It is expected that with the government investments in infrastructure projects, the sector will recover by 4.5-5% in 2021. 

Car production dropped 30% in 2020. The Federation of Thai Industries predicted that car production will pick up 5.12% to 1.46 million units in 2021. Of these, half will be export and another half will be for domestic sales. 

Electrical appliances production index declined from 96.5 in 2019 to 93.3 in 2020. Ministry of Industry projected that the electrical appliances output will recover at a 6.4% growth rate in 2021. 

Vietnam is one of the fastest countries to control COVID-19, resulting in business activities accelerating in the third quarter of 2020, at 2.7%, and 4.5% in the fourth quarter of 2020. The country’s GDP growth rate remained positive amidst the severe situation at 2.9% y-o-y in 2020. According to Vietnam Steel Association, Vietnam’s economy is expected to increase at 6-7% in 2021. 

Construction growth rate fell 4.4-4.6% in the first two quarters in 2020 and picked up with a growth rate of 5.7% y-o-y in the third quarter, compared to the average growth rate of 9.6% over the last 5 years (2015-2019).

It is expected that public investment (which contributed 6.7% growth in construction sector in 2020) will expand 6% in 2021, concentrating on key socio-economic infrastructure projects, especially transport, water resources, healthcare and agriculture. The government would allocate VND2,750 trillion (USD119.3 million) for public investment during the 2021-2025 period. 

Source : SEAISI