SINGAPORE, August 6, 2020 – The COVID-19 pandemic continues to cast a long, dark—and uncertain—shadow over the outlook for growth, having wreaked havoc on the global economy since February 2020. ASEAN+3 governments have taken unprecedented measures to contain the transmission of the virus and keep their economies afloat. This challenging situation is highlighted in the August Update of the 2020 ASEAN+3 Regional Economic Outlook released today by the ASEAN+3 Macroeconomic Research Office (AMRO).

In the ASEAN+3 region, strict containment measures to prevent the virus from spreading have caused economies to come to a standstill, leading to massive increases in unemployment, disruptions to businesses, and widespread collapse in domestic demand. Bans on international travel have decimated the region’s all-important tourism sector.

Encouragingly, the pandemic has been relatively well contained in the region and authorities have begun to gradually open up their economies. Recent indicators show significant improvements in production and trade for some, while high-frequency indicators of people movement suggest that activity within the region has been gradually recovering in recent weeks as containment measures are eased.  However, the opening-up has also led to renewed outbreaks in several places and authorities have had to re-tighten restrictions.

“We expect a gradual U-shaped recovery in the ASEAN+3 region, led by China,” said Dr. Hoe Ee Khor, AMRO Chief Economist. “Regional growth is expected to slow sharply this year, to 0.0* percent, from 4.8 percent in 2019, before rebounding strongly to 6.0 percent in 2021.”

He added that nine of the 14 ASEAN+3 members are expected to contract this year. Economies projected to record positive growth rates are China and the smaller ASEAN economies – Brunei Darussalam, Lao PDR, Myanmar, and Vietnam.

AMRO’s growth trajectory is predicated on the effective containment of the COVID-19 virus, both regionally and globally. The resurgence in infections in some parts of the region and elsewhere have heightened caution about another spate of lockdowns, which the ASEAN+3 economies can ill-afford, even though most still have some fiscal and monetary space to provide support if needed.

“The biggest challenge facing ASEAN+3 policymakers in the second half of 2020 will be balancing the trade-off between easing restrictions to revive their economies and risking another wave of infections,” said Dr. Li Lian Ong, Group Head and Lead Specialist for Financial Surveillance and Acting Group Head for Regional Surveillance at AMRO. “Managing the exit from the raft of pandemic policies will be key to regional financial stability.”

*The region’s GDP projection is revised from 0.1 percent to 0.0 percent following newly-released GDP data for the second quarter by the Philippine government on August 6, 2020.