May 16, 2022

Students wearing face masks during the Covid-19 pandemic sit on Jan.

Chaideer Mahyuddin | AFP | Getty Images

SINGAPORE – Covid-19 infections are on the rise in several major Southeast Asian economies, and that has led Goldman Sachs to lower its 2021 growth projections for most of the region.

The spread of the more transmissible Delta variant has driven the daily Covid cases in Indonesia, Malaysia and Thailand to record highs in recent weeks. This has led to tighter restrictions in Indonesia and Thailand and an expansion of restrictions in Malaysia, Goldman economists wrote in a Thursday note.

In the Philippines, the spread of the coronavirus has made a relaxation of social distancing measures “less likely” this year, the economists added.

Renewed virus outbreaks and stricter restrictions are likely to “put significantly more strain on growth” in the second half of 2021 than previously assumed, the economists said.

Goldman lowered its growth forecasts for Indonesia, Malaysia and the Philippines by more than 100 basis points. Singapore and Thailand saw a minor cut across the board.

Slow vaccination rate

The rapid increase in Covid infections across Southeast Asia is due to the fact that vaccination progress in the region – with the exception of Singapore – is lagging behind many countries such as the USA and Great Britain

Singapore has one of the fastest vaccination rates in the world, with over 41% of the population fully vaccinated, according to the latest data from the online statistics portal Our World in Data.

But the rest of the region is much slower: Malaysia fully vaccinated 12.4% of its population while Indonesia fully vaccinated 5.7% of its population, the data showed. Less than 5% of the population in Thailand and the Philippines are fully vaccinated against Covid.

Singapore, which tightened social distancing measures in early May, began easing restrictions last month. Goldman economists predicted Malaysia will follow next in the fourth quarter, while the other Southeast Asian economies will not do so until the first half of 2022.

Goldman said stronger global growth will most benefit trade-oriented economies like Singapore and Malaysia. Malaysia, which is a net commodity exporter, should also benefit from higher commodity prices, the bank said.

Meanwhile, “greater exposure to sectors such as tourism, lower exposure to world trade, and limited monetary policy buffers are likely to lower sequential growth in Indonesia and Thailand and keep sequential growth recovery in the Philippines more subdued than our previous expectations.” It added.