A new report has found that the COVID-19 pandemic pushed 4.7 million people in Southeast Asia into extreme poverty in 2021, following the loss of 9.3 million jobs since 2019.
In its Southeast Asia Rising from the Pandemic report, released today, the Asian Development Bank (ADB) also found that the Omicron wave could cut the region’s economic growth by as much as 0.8 percentage points in 2022.
Moreover, the region’s economic output in 2022 is expected to remain more than 10% below the baseline no-COVID scenario.
Among the most affected are unskilled workers and those working in retail and the informal economy, and small businesses without a digital presence.
“The pandemic has led to widespread unemployment, worsening inequality, and rising poverty levels, especially among women, younger workers, and the elderly in Southeast Asia,” said ADB President Masatsugu Asakawa.
“ADB will continue to work with policymakers as they seek to rebuild, improve national health systems, and streamline domestic regulations to strengthen business competitiveness.
“We encourage Southeast Asian governments to invest in smart, green infrastructure, and adopt technological innovations to reinvigorate economic growth.”
Reasons to be optimistic in 2022
Two years after the pandemic began, the report found that growth prospects are brighter for economies with widespread technology adoption, resilient merchandise exports, or rich natural resources.
The report also notes that an economic recovery may already be underway, with most countries seeing visits to retail and recreational areas rising by 161% in the two-year period ending 16 February 2022.
Still, the region faces global headwinds, including emerging COVID-19 variants, the tightening of global interest rates, supply chain disruptions, inflation, and higher commodity prices.
With 59% of the region’s population fully vaccinated as of 21 February 2022, the report calls on Southeast Asian governments to allocate more resources to help health systems deliver care, improve disease surveillance, and respond to future pandemics.
The ADB believes that health investments can boost economic growth by increasing labour participation and productivity.
For example, the report calculates that Southeast Asia’s economic growth could rise 1.5 percentage points if health spending in the region reaches about 5% of gross domestic product (GDP), compared with 3% in 2021.
The report recommends that countries pursue structural reforms to boost competitiveness and productivity.
Such reforms could include simplifying business procedures, reducing trade barriers, and encouraging small enterprises to adopt new technologies.
This could also include skills training to help workers address widespread disruptions to the labour market and the relocation of jobs across sectors.
ADB added that governments should maintain fiscal prudence to reduce public deficits and debts, and modernise tax administration to enhance efficiency and broaden the tax base.
The report was presented at the Southeast Asia Development Symposium (SEADS), ADB’s annual flagship knowledge event in Southeast Asia.
The symposium gathers leaders from government, industry, academia, and other sectors to explore solutions to critical development issues such as climate change and technology development.
This year’s event, ‘Sustainable Solutions for Southeast Asia’s Recovery’, will focus on how the region can spur recovery from the COVID-19 pandemic by addressing supply chain bottlenecks, reviving tourism, and advancing digital transformation.
This year’s two-day virtual event is expected to draw about 5,000 participants.