Even though the emergence of the Omicron variant of COVID-19 may have inspired a new wave of gloom and doom throughout the world, there seems to be a consensus that some countries—particularly those in the Southeast Asian region, which has long been an economic bright spot in a world that has experienced stagnating growth in recent years—are due for a comeback this coming year. These Asian economies are now showing signs of marked improvement and poised to hit pre-pandemic growth numbers.
Below are some of these countries that are likely to emerge as winners in 2022:
1.) The Philippines
COVID-19 has affected most of the world’s “high-contact industries” with the Philippines’ tourism industry being among those that were impacted severely. Despite serious losses in the tourism sector, traditionally one of the country’s heavy hitters in drawing foreign money, the Philippines has made several gains in other areas—particularly construction and manufacturing.
Provinces hosting industrial real estate zones—areas that are primarily engaged in for-export manufacture and business process outsourcing—continued to see growth throughout the pandemic. Additionally, major infrastructure projects continued, mostly as scheduled, generating activity throughout the construction supply chain.
Another less talked-about factor that is seen to aid the Philippines’ economic growth in 2022 is election spending. Election years have predictably caused an injection of cash in local economies, particularly in lower-income households. Ad spending for the elections, which will be held in May, is also seen to potentially outdo all previous elections.
The pandemic itself also proved to be the impetus that kickstarted the necessary modernization of the Philippines’ telecommunications sector, which, for decades, lagged behind others in the region. The combination of added communications infrastructure and COVID-19 travel restrictions has led to an unprecedented number of people adopting the digital economy for the first time, spurring a wave of innovation and growth in online commerce. This accelerated adoption of ecommerce and other activities based on digital technologies is likely to supercharge GDP growth in 2022 and beyond.
As with the Philippines, its southern neighbor Indonesia is one of the few countries whose growth is seen to bounce back to close to pre-pandemic levels this year. A combination of dramatic reforms, as well as its geographic advantage in the newly-formed Regional Comprehensive Economic Partnership (RCEP) trading bloc, is set to help the world’s largest Muslim-majority country on the path to recovery.
Indonesia’s exports of raw materials are seen to receive a significant boost once the country ratifies the RCEP, which is seen to happen in 2022. Exports of rubber, minerals, steel, coffee, manufactured food items, and timber are all seen to recover or go beyond pre-pandemic levels with Indonesia’s entry into the economic bloc. Energy exports, particularly coal, may also contribute to this growth if Jakarta finally does decide to lift its current export ban.
Indonesia’s new tax reform bill is also seen as a potential bright spot for helping the Southeast Asian country’s drive towards recovery. Even as the country experienced unprecedented economic growth from the 2000s through to the pandemic years, the country’s tax rates remained one of the lowest in the region, making it difficult for the central government to finance any big-ticket projects to facilitate long-term growth. This new policy, along with its RCEP membership, may be instrumental in its development in the coming decade.
Singapore’s GDP growth rate in 2021 was the highest its been since 2010, defying virtually all assumptions from the previous year.
This was thanks, in part, to world governments switching gears from “Zero-COVID” policies to ones encouraging people to “live with the pandemic,” resulting in relaxed international trade and travel. As one of the world’s busiest transportation hubs, Singapore’s growth rate was perfectly positioned for a rebound when world travel and commerce readjust to a so-called new normal. Foreign direct investments likewise flowed back into the city-state.
Another factor seen to secure continued economic growth in the city-state is the strengthening of the manufacturing sector, which has lost some luster compared to services in previous years. Construction has also seen a rebound after experiencing a contraction in 2020, further driving growth.
Singapore, as do many other countries around the world, has not gone back into the same kinds of lockdown measures that it implemented earlier in the pandemic, so it’s unlikely that the Omicron variant will do as much damage in economic terms as many feared. What this means is that continued growth will remain likely throughout 2022, though perhaps slower than projected last year.
The uptick of global commerce and travel has benefited Malaysia for much the same reasons it had Singapore, with FDI’s flowing back in unexpected quantities in 2021 as a result of the less-restrictive trade and travel.
Commodities prices in 2021 also heavily favored Malaysian exports, particularly electronics components and devices, as well as energy-related exports. Its high vaccination rates have also made it a more favored destination for travelers compared with most of its ASEAN neighbors.
While it may be too soon to make any definite predictions, most of the factors that have allowed Malaysia’s recovery in 2021 are likely to hold true for most of 2022.
Prospects for Wider Recovery in Asia
If there’s one thing the pandemic has taught us, it’s that even predictions made by top economists and policymakers are no match for so-called black swan events like the initial emergence of COVID-19 or the unexpected virulence of its different variants. Still, the worst seems to be over. Hopefully, Asia’s and the rest of the world’s economies end this year stronger and better able to meet the challenges of future crises to come.