The number of coronavirus cases is rising dramatically all around the world after Southeast Asia and has a significant impact on the potential economy. Many of the people have lost their lives due to COVID-19, the number of victims and the death number is increasing with each passing day globally.
The deadly virus originated in China and has a collision on China’s economy, it not only decreases the supply chain market but also left a huge impact on the economy of most of the regions in Southeast Asia. Research made by ASEAN+3 Macroeconomic Research Office (AMRO) reveals that the COVID-19 epidemic is deducted more than 50% point from the economic growth in 2020.
Covid-19 Resulted in Economy Fallout in Southeast Asia: Know How?
China can be considered as one of the largest sources of imports in the world. 9 of the 10 Southeast Asian economies fall behind China when it comes to importing as it possesses the second-largest export market. While Southeast Asia is considered China’s most important and largest trading partner, which is trailing the EU and helping them to stay ahead of the USA.
Thus Southeast has experienced great effects when it comes to the supply Chain and overall economy due to Coronavirus. The impact of Coronavirus differs in each country, it vastly depends on the makeup of the economy of each country and also upon their trading relations with China.
But it is estimated that Southeast Asia will get the loss covered very soon as many multinational companies are looking forward to finding the alternative manufacturing destination. Some of the technology giants such as Microsoft, Google, Apple, and many others are some of the well-known names among the US technology giants who are looking forward to improving their hardware products productively away from China, reportedly they are planning to move to Southeast Asia.
Know-How the Coronavirus Ripple Effects Hampered the Economy of Southeast Asia
The confirmed number of cases of Coronavirus is increasing continuously globally. According to data, there are more than 1,000 victims and the counting is increasing day by day, the coronavirus strain has already claimed more lives of people compared to Severe Acute Respiratory Syndrome (SARS) outbreak in 2002–2003. Around 2% of people who were affected by the Coronavirus died around the world, but the number is higher in China compared to other South Asian regions.
Many of the authorities are trying hard to stop the rapid spread of the virus in China, they have locked down Hubei Province on the regions where the outbreak was reported initially and became the reason for economic activities in the rest of China. Many of the countries like the United States, Australia, Vietnam, the Philippines, and many more have curbed travel to China due to the rise of Coronavirus in some of the regions in China.
Quarantine measures which the authorities have taken have stopped the virus from spreading faster, it has even stymied economic activity. The effect of Coronavirus has left ripple effects on the economies of nearby countries like Southeast Asia and many others. The effect can be measured in three main ways, which includes:
- Curtailing Chinese tourists.
- Disrupting supply chains.
- A damper on economic demand in China.
Curtailing Tourism in Southeast Asia and China
The deadly outbreak of Coronavirus has revealed that many of the Southeast Asian regions vastly depend on the tourism of China. While the travel restriction in China has decreased the flow of tourists. Hospitality and transportation are two such tourism-related industries which have been facing a huge decrease in their business as the virus effect has hit them particularly hard.
One of the greatest impacts of the outbreak is faced by Thailand, which is already contending with a sluggish economy. Thailand is facing huge problems due to weak domestic investment, and an aging population for a long time.
Besides Thailand, other countries like Southeast Asia, Indonesia, Vietnam, the Philippines, and many others have experienced a huge decrease in tourism due to Coronavirus. All these countries were hugely dependent on tourists from China and also from other countries, hence they are experiencing a huge impact on the tourism economy.
Impact of Supply Chain
China’s economic footprint has increased drastically in the last few decades. As per the UN Conference on Trade and Development report, China was the main source of more than 8% of manufacturing goods exporters worldwide in 2003, while this number increased to 19% during 2018, but due to the outbreak of corona, it has decreased dramatically in the last few months.
Most of the counties have become more dependent on China economically in recent years while compared to that, China has become less dependent on any of the world’s. Numerous countries import intermediate goods from China in large numbers and later use the same as components to create finished goods to supply in the market overseas. This simply means any disruptions in supply chains in China often had a great impact on global domino effects.
The Damper in IT Economy
The IT sector in all the Southeast Asia countries have also experienced a drastic fall down in their economy due to Coronavirus, the number of entrepreneurs investing on an app like youtube or any other app solution has decreased drastically as almost every individual sector is experiencing the drop-down in their economy due to Coronavirus.
Thus no one is ready to invest their penny on smart gadgets, equipment, or any other solution which is imported from China. IT sectors based in Southeast Asia or any other country are also facing the impact of an outbreak in their sector due to the rise of Coronavirus.
Decrease in Demand: Has Great Impact on Economy
There is no doubt that Coronavirus has a great impact on the supply chain, very few Chinese prefer to travel abroad. Fewer Chinese consumers are only buying or purchasing goods or services from the market due to an outbreak of the Coronavirus. This simply means that it has a great impact on various sectors such as retail outlets, factories, transportation hubs, and many more, they are having very limited or shut down in operations, it is assumed that the impact of Coronavirus will be having a great massive impact on various countries and especially on South East Asia growth as will also be massive.
When it comes to tourism and manufacturing, then Asia was more dependent on the Chinese market. The source of growth was found since SARS struck in 2003, most countries that have been experiencing a huge impact on their economy include Taiwan, Malaysia, Singapore, Vietnam, South Korea, and many more.
Summing It Up
Southeast Asia is experiencing economic fallout due to the Coronavirus in an array of various sectors, which simply includes tourism, manufacturing, etc. Some of the economies that were fully dependent on China like Thailand and Vietnam have experienced the worst hit in their sector. Some of the cracks have also been faced by Southeast Asia due to Coronavirus.
Many of the neighboring countries of China who were totally dependent on China-centric supply chains and external demand to improve their own domestic economic growth, have to face financial crises presently.
It is reported that the central banks in Southeast Asia are going to opt to cut their interest rates in the short term. They will offer their currencies to weaken, they are ready to do so as they believe that it might help them to improve their countries’ exports more competitively. Governments are also ready to roll out most of their stimulus packages to meet the offset of the drag.
Gaurav Kanabar is the Founder and CEO of Alphanso Tech, an India based IT Consulting company that provides Deezer clone development service and other app development services to individuals as per their specified demand. Besides this, the founder also loves to deliver excellent niche helping readers to have deep insight into the topic.