The near-term outlook for South East Asia has improved dramatically over the past month or so. Daily cases of COVID-19 have collapsed and are now less than one-third of the level they were at in August. With vaccination rollouts also making good progress – almost 30% of the region’s population is now fully vaccinated – governments have begun easing restrictions. Our Mobility Trackers have rebounded strongly, and in the case of Indonesia and the Philippines are now at their highest level since the start of the pandemic. Although the Q3 data due to be published over the coming weeks will likely paint an ugly picture, growth should rebound strongly at the final quarter. Given the improving outlook, we have taken out the rate cuts that we had originally pencilled in for Thailand and the Philippines. That said, with inflation still low, rate hikes are still some way off. Finally, with factories being reopened, industrial production is also starting to recover, which should also help ease some of the supply shortages which are hobbling the world economy.
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