1Q21 GDP recovery in North Asia, except for Japan
North Asia showed less of a fall in 2Q20 GDP (the height of the pandemic). Taiwan is the only country in Asia that maintained positive GDP growth throughout the whole crisis. It has also rebounded the strongest along with HK, which was devastated by protests before the pandemic. Japan is the one country that has seen its 1Q20 GDP growth take a downturn.
1Q21 GDP growth still negative in South East Asia
Southeast Asia was hit hard by the Covid-19 crisis, with every country showing deeply negative GDP growth in 1Q21. Most of these countries rely on tourism, which came to a dead stop. Philippines and Malaysia took the deepest dive in 2Q20 and, as of 1Q20 was about back to zero GDP growth. However, unlike Malaysia, the Philippines has been slowly creeping back.
1Q21 Consumption growth hit hard in Japan
In North Asia, Japan has seen a recent deceleration in consumption growth. Taiwan has had the strongest consumption recovery, though a recent outbreak of COVID-19 has slowed things a bit in 2Q21.
Thailand is heading into a double-dip
Thailand is the only country in South East Asia that has seen consumption growth fall in 1Q21 driven by further government-mandated lockdowns. The government has had lockdowns in most of 2Q21, so I would expect this trend to continue. No other country had positive growth in consumption; all are now close to zero.
A rise in oil price could hit Singapore, Thailand, and Korea hard
Oil imports as a percent of GDP were significant in five countries in Asia: Singapore, Thailand, Korea, Taiwan, and India. Vietnam and Indonesia had almost no dependency on imported oil and would not be impacted by rising oil prices. In fact, their production of oil could make them marginal beneficiaries.
Covid-19 impact on economies in Asia
The Philippines was hardest by Covid-19 in Asia, with GDP down 9.6% in 2020. This was followed by India, Hong Kong, and Thailand, each falling between 6 and 7%; additionally, they were all already decelerating in 2019.
Taiwan was most resilient, with its GDP growing faster in 2020 than it did in 2019. China saw a significant fall from 6.4% growth in 2019 but remained positive at 2%.
Structure of economies
Balanced Korea – The GDP of Korea has been the most balanced of the countries in Asia. Over the past four years, the economy was driven 64% by consumption, 31% by investment, and 5% driven by net exports.
Importing and consuming the Philippines – The Philippines, Hong Kong, and Japan are the countries in Asia most driven by consumption. However, consumption is highest in the Philippines due to it being the biggest importer in Asia.
Investing China – China is by far the country with the most investment-driven economy thanks to focused government policy and expanding private business. Meanwhile, the islands of Hong Kong and Taiwan have had the lowest level of investment-driven GDP. Both are relatively developed and small.
Investment lacking Philippines – Over the past four years, the Philippines’ economy has struggled with low investment and low net imports, which causes GDP to be mainly reliant on domestic consumption.
Exporting Singapore – Singapore has the most export-driven economy in Asia, making it one of the richest. It is followed by the second-highest net exporter in Asia, Taiwan. The Philippines and India are the two net importers in Asia. China, India, Japan, and Korea are some of the world’s largest oil importers.
Consumption as a % of GDP collapsed in Taiwan, surged in the Philippines
Taiwan faced the most significant fall in domestic consumption relative to the prior four years (2016-2019) because of Covid-19. Singapore, Korea, and Indonesia followed this. Thailand, Malaysia, and the Philippines saw the most significant increase in consumption.
The most profound fall in investment came in the Philippines, followed by Malaysia and Singapore. Thailand saw the most significant jump in investment, followed by Taiwan. The Philippines has struggled through COVID-19 times, with some of the highest numbers of deaths and severe lockdowns.
Thailand had 7 million foreign visitors in 2020, which almost all came in January and February. This was down from 40 million tourists in 2019. This massive fall and other factors lead to the most significant drop in net trade coming from Thailand. Singapore was the country in Asia that saw the most significant jump in net trade relative to GDP.
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