With the coronavirus pandemic hitting ASEAN economies hard, recovery for now seems an uphill task as many sectors are likely to continue bearing the brunt in the absence of a vaccine. However, some sectors, such as consumer retail, are likely to show resilience, and it is expected that the consumer sector will be the first to come out of the woes of the pandemic in these countries. “We expect consumer staples and telcos to recover first with fintech following close behind; while tourism, gaming and construction will continue to struggle,” CLSA said in a recent report on ASEAN market outlook. However, some sub-sectors such as discretionary goods within the consumer retail sector are unlikely to be as lucky.
With consumers confined to their homes, e-commerce has registered a visible growth and continues to do so. It has also opened the door for fintech to expand as traditional banks. In fact, sensing a scope, new players are now racing to offer platforms for online banking, e-wallets and e-payments. However, one sector that is powering them all is the telecom sector which is also expected to boom due to higher usage and demand for data.
The ASEAN organization comprises 11 countries viz — Brunei, Burma (Myanmar), Cambodia, Timor-Leste, Indonesia, Laos, Malaysia, the Philippines, Singapore, Thailand and Vietnam. While each country differs in how the pandemic has impacted them and they have also taken different measures to tackle it, CLSA said that there are clear commonalities between them; one such being a significant contraction in GDP in the five major markets covered by CLSA.
Tourism, construction to drag
The lull in the tourism and construction sector is likely to continue in the absence of a vaccine. “International tourism remains almost non-existent and without a vaccine it is likely to remain subdued for some time. Casinos will be hit hard,” the report said. While governments have been encouraging domestic tourism, in most cases, especially for Malaysia and Thailand, it is unlikely to offset what has been lost. On the other hand, the construction sector is also expected to lag as it struggles to adapt its labour-intensive modus operandi.