Vietnam and Singapore are reporting a faster-than-expected V-shaped recovery compared to the rest in the Southeast Asian region, according to Singapore-based Business Times, citing a report from Malaysia’s largest bank Maybank Kim Eng.

Vietnam would be the only major economy in ASEAN that escaped recession in 2020. Photo: Thanh Hai.

Maybank’s report suggested generous government subsidies, record low interest rates, high household savings rate and work-from-home policies may be driving these “V” recoveries.

Vietnam is the only major economy in ASEAN that escaped recession, the economists said. Exports and retail sales have normalized after a brief contraction, while the “V” recovery in freight carried confirms the strong pick-up in domestic business and transport activities, they said, adding that the country's manufacturing purchasing managers' index has risen a lot more quickly and strongly than the rest of ASEAN.

In Singapore's case, semiconductor production and exports have staged a sharp "V" rebound, while container throughput has also climbed back to pre-pandemic levels, they said. At the same time, property transactions in both private and public housing markets have jumped to 40% above pre-pandemic levels, boosted by record low mortgage rates and ample liquidity.

In 2021, ASEAN’s recovery could start to broaden when a vaccine becomes more widely available, according to the report.

Specifically, it expected a vaccine to help improve domestic mobility, ease strict lockdowns and social distancing rules, a shift that will make a significant difference to the larger pandemic-hit domestic economies, particularly the Philippines and Indonesia.

The International Monetary Fund (IMF) predicted Vietnam would be the only country among major economies in ASEAN – 5 (Thailand, Malaysia, Indonesia, the Philippines, and Vietnam) expected to deliver positive growth this year at 1.6%.

Additionally, the Philippines is set to have the biggest GDP decline this year among ASEAN countries, with a contraction of 8.3%, compared to a 3.6% decline projected in June. It is followed by Thailand (-7.1%), Malaysia (-6%), and Indonesia (-1.5%).

Overall, ASEAN-5 economies are expected to contract by 3.4% in 2020, before expanding 6.2% in 2021.

For this year, the Vietnamese government targets economic growth of 2% in normal conditions and 2.5% if favorable factors emerge.