SINGAPORE (Apr 8): The Asean + 3 Macroeconomic Review Office (AMRO) has slashed its 2020 growth forecast for Asean + 3 nations to 2%, from its previous prediction of 4.9%.
The macroeconomic watchdog which monitors Asean, Japan, China and Korea says the upgrade follows the uncertainty from the Covid-19 pandemic. However, it expects growth in the region to have a strong rebound to 5.5% in 2021 once the health and economic crises abate.
Meanwhile, Asean economies are expected to weaken sharply to grow at an average of 1.1% before recovering to 5.2% in 2021.
The data was unveiled by AMRO’s chief economist Khor Hoe Ee in an outlook briefing on Tuesday.
Touching on how the data was arrived at, Khor said that preparations for this outlook forecast was “almost impossible”, despite this being the watchdog’s fourth iteration.
“We have revised our growth projections significantly downward within three weeks of the data cut-off date on March 16 as new, and sometimes startling, information emerges,” noted Khor.
“Although the issues and trends [forecast] remain germane, [we] anticipate that the Covid-19 pandemic will become the unravelling thread that ties several tail risks together”.
Looking ahead, Khor anticipates the Asean + 3 region can leverage on the fourth industrial revolution to grow their manufacturing and export services sectors through technology.
For the manufacturing sector this means tapping on tech to make the manufacturing-for-export process more seamless; while for services it involves a transition into technology-driven service.
With the region being christened ‘Factory Asia’ and ‘Shopper Asia’, such changes will enhance its’ competitiveness and help it retain its status as the source of final demand for goods and services, muses Khor.
Lastly, he believes there is a need for stronger regional integration to give it a much-needed lift to enjoy stronger growth.
For this, he says policymakers should broaden and quicken their efforts in developing human capital, facilitating freer-cross border flow of skilled labour and professionals and updating rules governing trade.
Khor’s comments are timely given the need for better integration amongst countries to facilitate a continuous seamless supply of goods and services, in this period of lockdown.
Aside from this, he believes a fresh perspective on ‘social safety net’ is needed to recognise the growing importance of the gig economy.
“The global tragedy of the Covid-19 pandemic reminds us of our collective destiny and challenges the region to demonstrate its resilience and commitment to come up with solutions that safeguard and strengthen our long-term interests,” Khor reflected.
“The capacity to rise to the challenge is not in doubt, and the will to shape our future together is strong”.
