Asia faces ‘bumpy highway’ forward as Covid instances stay excessive
A woman is given a dose of Covid-19 vaccine during the mass vaccination at Tanah Abang Textile Market in Jakarta, Indonesia on June 19, 2021.
Agung Kuncahya B. | Xinhua News Agency | Getty Images
Asia’s fight against the coronavirus is far from over, but an expected increase in the spread of Covid vaccines in the coming months could defuse the situation, according to investment bank HSBC.
India was the hardest hit country this year, suffering from a devastating second wave that saw cases soar between February and early May. Although the daily reported numbers of infections have dropped significantly from a peak of over 414,000 cases in a day, the South Asian nation still reports an average of 50,000 cases per day.
Countries like Indonesia, Malaysia and Nepal have seen a sharp surge in cases recently, while the numbers of infections in other places continue to rise. Nations like Singapore, South Korea, Japan, and China have also faced outbreaks recently.
“It’s easy to believe or tempting to think we’ve got through it all, but the reality is, if you look at Asia ex-India, we’re currently seeing record numbers of daily infections,” said Frederic Neumann, co-head of Asian economic research at HSBC, said on CNBC’s “Squawk Box Asia” on Wednesday.
“There are still terrible human tariffs in many parts of Southeast Asia and even in India,” he said.
Experts say the closely watched coronavirus mutation known as the delta variant is partly responsible for the rise in new cases in many parts of the world. First discovered in India and now present in over 80 countries, Delta is said to be more contagious than previous variants.
Although it remains unclear whether the variant is more deadly than previous strains, its increased transmissibility, especially in environments with low vaccination and minimal social distancing, means that in absolute terms it is likely to infect more people, according to analysts at political risk advisory group Eurasia Group.
“Countries with younger populations and wetter climates could therefore experience more severe outbreaks than previous waves, even if the proportion of young people with serious illnesses remains the same,” said Eurasia Group analysts in a recent statement. They added that there is a growing risk of health system overload in many emerging markets.
Asia lags far behind North America and Europe in vaccines. The data showed that just over 23% of the population received at least one Covid vaccine dose, compared to over 40% or more in the other two regions.
“We are far from finished,” said Neumann from HSBC. “That said, if we look at the third quarter, there’s still a risk that at least some glitches will get through. We just need these vaccines. We need more supply. We have to introduce them. “
Neumann said that based on publicly available information, HSBC predicts that many Asian countries will not achieve herd immunity until early 2022 at the earliest.
“That means some of the restrictions, especially on travel, remain in place, and unfortunately that still means a bit of a bumpy road for the next few months,” he said.
When a country reaches herd immunity, it means that the virus can no longer spread rapidly because most of the population is either fully vaccinated or would have become immune from infection.
In a release, Neumann and other HSBC analysts said they expect local demand growth in the region to pick up pace over the next six months. It is due to a large, expected surge in vaccine distribution, they said.
According to the bank, exports remain strong despite ongoing transport disruptions and supply chain bottlenecks.
“The latter should slowly subside as demand for services recalibrates and factories make up for lost time. However, the crisis has shown that there is an urgent need for more investment in capacity – expect investment to rise as the region tiptoe out of the pandemic, ”wrote the HSBC analysts.
The investment bank forecast that Asia (excluding Australia and New Zealand) will grow 6.6% year-on-year in 2021 – compared to a 0.9% decline in the previous year – and 4.6% in 2022.