Covid-19 may bring CLMV growth to new lows: report

Disinfectant is sprayed on the streets of Yangon to curb the spread of Covid-19.
Disinfectant is sprayed on the streets of Yangon to curb the spread of Covid-19.
APRIL 28, 2020 - 6:51 PM

THE Covid-19 pandemic is putting severe growth pressure on the CLMV economies -- Cambodia, Laos, Myanmar, and Vietnam -- and may cause the region's growth to slow a historical low, according to a Maybank Kim Eng report on Apr 28.

Analysts Linda Liu and Chua Hak Bin forecast CLMV gross domestic product growth to slow sharply to 3 per cent in 2020, down from 6.9 per cent in 2019, before recovering to 6.5 per cent in 2021.

Vietnam is expected to do better than the rest with 3.6 per cent growth, thanks to a more diversified economic structure, and a healthier fiscal position and macro fundamentals -- though that figure is still a sharp fall from 7 per cent growth in 2019.

Vietnam also appears to have successfully flattened the Covid-19 pandemic curve, and became the first country in Asean to start easing lockdown measures on Apr 23, with trade and retail businesses allowed to reopen, and public transport resuming.

Data compiled by Google's Covid-19 Community Mobile Reports suggest that movement to restaurants and retail venues is starting to recover.

In contrast, Cambodia will be worst hit with just 0.5 per cent growth, down from 7 per cent in 2019. This is due to a high reliance on tourism -- with tourism and transport-related sectors accounting for 12.3 per cent of GDP -- and exports of textiles and garments.

Cambodia has yet to impose nationwide lockdown measures, though a state of emergency bill was recently passed, which will allow the government to impose restrictions.

Myanmar is expected to see growth of 2 per cent this year, down from 6.8 per cent in 2019. The country is highly reliant on tourism, with tourism and transport-related sectors accounting for up to 11.2 per cent of GDP -- a figure which could be even larger if accommodation and food services are taken into account.

It is also most vulnerable to the collapse in manufacturing and export demand, with manufacturing accounting for 24.2 per cent of GDP.

Laos may be more immune, with manufacturing accounting for just 7.5 per cent of GDP and tourism and transport, 3.9 per cent. But its heavy reliance on electricity and gas instead (10.8 per cent) could hurt the economy as factories shut and travel slows.

Growth in Laos is predicted at 2.4 per cent in 2020, down from 4.7 per cent in 2019.