KUALA LUMPUR – A recent report showed that ASEAN economies are projected to have a 4.9% growth for 2022 and 5.3% growth in 2023 due to higher vaccination rates although there are still risks.
The 11th issue of the ASEAN Economic Integration Brief (AEIB) stated that ASEAN countries were able to reopen due to the effective rollout of vaccination programmes. This led to the speeding up of economic activities and aided recovery of the job market.
The ASEAN Integration Monitoring Directorate of the ASEAN Secretariat reported that the full dose vaccination rate had reached 65.9% of the population while 25.2% had received booster dose shots as of May this year.
With that, the AIEB noted that ASEAN nations are anticipated to reopen completely by the second half of 2022.
The report believes that despite the concerns of COVID-19 variants and hiking commodity prices in the first half of 2022, optimism of growth would continue into 2022 with the region’s manufacturing index still picking up pace.
In 2021, the region’s economies had a growth of 3%, against the contraction of 3.2% in 2020. Last year’s performance was driven by robust consumption and trade.
The unemployment rates in ASEAN showed a decline last year, while trade grew by 25.1% to US3.34 trillion, an amount that surpassed pre-pandemic levels.
Last year’s investments also showed a 42.3% growth to US$174.1 billion, primarily in the manufacturing, financial and insurance services, and the information and communication sector.
The Russia-Ukraine conflict is attributed as one of the setbacks to the global and ASEAN region’s economic recovery, along with global supply chain disruptions which caused price volatility particularly for energy and food commodities.
The report added that continuous inflationary pressures could reduce consumers’ purchasing power and impact industrial productivity.
This would increase the risks associated with monetary policy normalisation in major countries, as they emerge gradually from the accommodative policies that were in place during the pandemic.
Additionally, the report also emphasised that tighter policy rates in major countries, particularly the US, could spark capital outflows in emerging economies and further exacerbate their external vulnerabilities.
As a result of the Federal Reserve increasing their interest rates progressively since March this year, ASEAN countries had their currencies depreciate against the US dollar.
The report said that although the majority of economic and financial conditions remained manageable throughout the first half of this year, some of the ASEAN countries have tightened their monetary policies.
This is why central banks must remain vigilant and cooperate to strengthen resilience against future shocks, including financial vulnerabilities both from within and outside the region, it added.
Furthermore, ASEAN countries have affirmed commitment to work together and address the pandemic and have increased its efforts in the areas of sustainability and digitalisation. The transition towards a circular economy, carbon neutrality and the digital economy will be a driver for the ASEAN region’s development in the coming years, it said.
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