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Southeast Asia heading for trouble

  • Date modified: November 12, 2020

With COVID-19 spreading around the world, more and more countries are starting to worry what the long-term effects will be. There is little doubt economies and societies will be hurt. Southeast Asia isn’t exempted from this global concern. EMEx goal during this research was to assess the level of damage to both economy and society we expect in 2020 as a result of the COVID-19 pandemic.


SEA Damage To
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 We focused on generalizing terms like ‘low damage’, ‘serious damage’, ‘heavy damage’, and ‘very heavy damage’ since the crisis is still evolving. Low Damage means limited impact on economy and society easily to overcome within the 2020 timeframe. Serious Damage means limited impact on economy and society but having lasting effects in the 2020 timeframe. Heavy damage means long lasting negative effects to both economy and scoiety making 2020, and probably beyond, a challenging period. Very heavy damage means long-term damage to both economy and society, far beyond 2020, likely to result in a secondary crisis. We used four variables to assess the level of damage to each Southeast Country.

Epidemic likelihood risk

The first variable we considered is the epidemic likelihood for each Southeast Asian country. The region survived the first wave of infections very well. The second wave however seems to be more serious. We expect the more likely an epidemic will happen, the more serious the damage to society and economy will be. High number of cases will result in heavier measures and strained healthcare infrastructure. For example, Singapore is ranked in the lower ranks because it is a small country where social distancing and restrictions are easy to enforce. The government has taken an active approach in early detecting infections. Indonesia and Malaysia however are ranked higher when it comes to epidemic likelihood. Indonesia has in our assessment taken insufficient measures to control the disease while Malaysia, already having the most patients in Southeast Asia, sees more infections each day.

Political risk

The second variable we considered is political risk. This means both the capability of each government to deal with this challenge and its consequences, as well as the effectiveness and long-term costs of the measures they are currently taking to contain the spread. Countries like Malaysia, Indonesia, and Vietnam have put billions of dollars into trying to prevent as many bankruptcies and unemployment as possible. The Philippines has imposed a quarantine, this will increase the political risk ranking because it will inflict heavy damage to the economy. But the damage is not as much as when the government would not have done anything. Countries like Laos, Timor-Leste and Myanmar score significantly higher due to the lack of measures they are taking risking a more serious impact to economy and society. However, Indonesia scores the most because, due to the epidemic likelihood, are risking being forced to take a more costly approach later on when the COVID-19 crisis spreads.

Economic stability risk

The third variable we considered is economic stability. This includes a lot of important sub-variables like economic diversity, GDP growth, FX reserves and how well their economy would cope with a crisis. Before COVID-19, Southeast Asia as a region was experiencing an economic boom and several countries have become far more resilient than they would have been a few years ago. Other Southeast Asian countries like Myanmar, Timor-Leste, Cambodia and Laos are still behind even though some of them are developing fast. It also includes questions like how well economies can deal with the stimulus packages and lockdown measures their governments are taking. Malaysia and the Philippines for example, are trying to increase deficit spending to round up such stimulus packages worth billions of dollars. This is normally a red flag for investors and credit rating agencies, but exceptions can be made under unique circumstances like today. The more stable an economy the better it will be able to cope with the heavy consequences and measures.

External shock risk

The fourth variable we considered is how vulnerable a Southeast Asian country is to external shocks. Any country can take the best measures it wants, but this is a pandemic in a globalized world. Meaning, a crisis in one or more countries will impact others as well. S&P Global predicts that the global economy has already fallen into a recession. For example, Singapore scores well in most of our variables but by far the worst in this category. The city state is a transport and financial hub and when the world sneezes, Singapore is sick. The country is already heading into a recession with the most optimistic scenario’s predicting 0.6% growth for this year. Countries like Thailand, Indonesia and the Philippines have a big tourism sector that have virtually collapsed. However, many of them are still depended on domestic consumption as well.


EMEx expects that most Southeast Asian countries are heading for a challenging 2020. Most countries are on the verge of serious damage to both economy and society. Most of them, like Singapore and Thailand, will be able to limit the damage and overcome it reasonably fast. Other countries, like Myanmar and Timor-Leste, are less connected to the global economy and less likely to have an epidemic limiting the damage. However, countries like Brunei, Philippines and Malaysia are heading for severe damage. Being heavily depended on global trade, energy prices, and tourism has influenced their rankings. The likelihood of an epidemic and the costs of lockdown measures had a push effect as well. Indonesia however, scores worst in our ranking. The country has been working hard on protecting domestic consumption, but this is becoming increasingly more difficult with the epidemic status on the rise. The longer it waits the more severe the lockdown effects will be. We assess Indonesia has taken the wrong approach to this crisis bringing it into the most vulnerable spot for the whole of Southeast Asia.

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