- August 16, 2021
- Posted by: admin
- Category: Centennial Asia Insights

Highlights from the CAA Weekly Table:
Asian political risks: No good news
- The collapse of the Afghan government hurts the region as a whole. American credibility and its security guarantees are under a cloud, potentially emboldening its rivals to undertake provocations. India is also a big loser. China, however, could emerge in a much better position – as both its major rivals, the US and India are on the back foot.
- Malaysia’s political crisis deepened with Prime Minister Muhyiddin’s resignation. He will continue as caretaker prime minister while the fragmented political groups struggle to agree on a new prime minister and ruling coalition.
- Two worrying trends emerge in Thailand: As protests spread, violence has increased. Moreover, without coherent leadership among the protestors, the likelihood grows that some disaffected groups might provoke the authorities into a harsher crackdown.
Asian economic prospects:
The resurgence in COVID-19 infections is hurting growth across the region but some countries are likely to rebound more strongly than others as the year progresses.
- China’s economy slowed across the board. But with activity likely to pick up on a rebound in investment, it is unlikely that policy makers will offer much stimulus.
- Taiwan and Singapore’s robust performance can be sustained. As vaccination rates improve, Malaysia should put its malaise behind it, especially as its export sector is doing well.
- India’s economy is finding its footing but Indonesia and the Philippines are still hurting.
Covid-19: watch four areas of scarring that will hurt the regional economies
- The crisis will leave public debt levels much higher, a damaged credit culture, deficiencies in the labour market and capital stock eroded to some extent.
- Taiwan, Korea, Vietnam, Thailand, China and Singapore come out looking stronger than the rest of the pack (Table 1). These countries are marked by relatively strong state capacity.
- Indonesia, India, the Philippines and Malaysia, however, are in a weaker position.
Table 1: Z-scores for metrics on economic scarring in East Asia
NPL ratio (%) |
Debt ratio (%) |
Labour scarring (% deviation) |
Capital scarring (% deviation) |
Z-scores, the higher the better |
|
Taiwan |
0.2 |
33.8 |
-3.2 |
9.4 |
3.3 |
Korea |
0.5 |
43.8 |
-3.8 |
4.1 |
2.0 |
Vietnam |
2.1 |
55.3 |
0.6 |
4.1 |
1.6 |
Singapore |
2.3 |
– |
-12.3 |
-1.7 |
0.8 |
Thailand |
3.1 |
52.1 |
-0.2 |
1.8 |
0.8 |
Indonesia |
3.3 |
39.4 |
-2.2 |
-2.2 |
0.5 |
China |
1.9 |
73.7 |
-5.1 |
– |
-0.9 |
India |
7.5 |
77.6 |
2.8 |
8.7 |
-1.2 |
Philippines |
4.5 |
57.0 |
-5.8 |
-18.3 |
-3.4 |
Malaysia |
1.6 |
62.2 |
-12.4 |
-16.9 |
-3.4 |
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