S'pore economy would be least affected in S-E Asia if Covid-19 cases spike: ADB

In the worst case scenario of a spike in Covid-19 cases, the impact on Singapore's economy would be limited compared to other countries in the region, said the Asian Development Bank (ADB) in a report.

The region is expected to grow by 5.1 per cent this year, but the spread of the Omicron virus variant could cut up to 0.8 percentage points off this estimate, said the report which was issued at the South-east Asia Development Symposium, held virtually, yesterday. If Omicron disrupts demand and the supply of workers who will either get sick or be required to isolate after exposure to the disease, it would affect economic activity.

All economies in the region would post a weaker growth, with Vietnam, Thailand, Malaysia and Laos most heavily affected. The varying impact of Omicron on growth forecasts range from downgrades of 1.9 points in Vietnam and 1.1 points in Thailand, to just 0.2 point in Singapore, should Covid-19 infections spike this year.

This is due to Singapore's strong health system, Covid-19 protocol, and high vaccination rate, said Mr James Villafuerte, senior economist of the South-east Asia regional department at ADB, in response to The Straits Times. "(Singapore is) also digitally enabled and can produce even with lockdown... the vaccination rate in Singapore, including booster shots, are also one of the highest in South-east Asia and it's factored in as part of the mitigating factors."

The region's economic output is likely to be down by 10.3 per cent this year against a baseline without the pandemic, said ADB. Among the most affected are unskilled workers, those in retail, the informal economy, and small businesses without a digital presence.

Reduced disease burden could enhance South-east Asia's growth prospects by about 1.5 percentage points compared to the baseline scenario for the simulation, which replicates forecasts from the Asian Development Outlook supplement issued in December 2021 by ADB.

In general, the increased gross domestic product growth stems from higher health spending, higher labour force participation rate, and increased labour productivity from better health of workers in the region, said the report.

Second Minister for Finance Indranee Rajah spoke at the symposium on the need to strengthen supply chains and international trade, and scale up finances for sustainability in the region. "The pandemic has accentuated the role of logistics as a critical enabler of the world's economy. We will need to collectively address disruptions in global supply chains and uphold an open, stable and rules-based trading system," she said. She also said the global supply network should be built on to strengthen trade and supply chain connectivity sustainably, and highlighted the need to catalyse sustainable infrastructure.