Asia: Covid catches up

In early December 2020, the very low prevailing daily case numbers in South Korea started to creep up, and at one stage topped 1,200 per day. Japan, which had inexplicably managed to be only mildly affected during earlier waves of the pandemic, started to see its numbers move higher even earlier, though the rise was slower and didn't really pick up aggressively until late December. Both Korea and Japan's daily Covid figures are beginning to ease down again now, but at their peak, Japan was registering close to 8000 cases per day.

Malaysia is now recording around 4,000 cases per day, Indonesia more than 10,000. China too has been seeing case numbers rise (see China section), though so far the numbers remain low relative to the millions who have been confined to their homes in response.

There are exceptions to this trend. In India, daily case numbers continue to fall but they still remain relatively high at around 14,000 a day if we accept the recorded figures at face value.

Even in Singapore, where the average number of community cases has risen from less than one to the occasional small cluster, the planned easing ahead of the Chinese New Year has been scaled back. Japan has been rolling out its regional states of emergency as caseloads have picked up in different parts of the country. Malaysia too has rolled out its movement restrictions. And in Indonesia, restrictions have been extended in Jakarta and Bali. The following table summarises what we believe to be the current situation in terms of restrictions around the region, against the recent seven-day moving average for daily cases.

Covid case numbers in Asia may still look favourable relative to Europe or the US, even if their tolerance for very low case numbers is low. But the vaccination rollout speed has been very slow. China is probably in the lead here, but China has billions of vaccinations to disseminate, and vaccinations per 100 of the population (which is the appropriate metric for vaccinations) remain exceptionally low.

Many Asian countries will not even begin to roll out vaccines until February, and few countries have secured sufficient doses of reliable and efficient vaccines to be able to cover their entire population, at least not yet. Either that or local regulatory bodies have been slow to authorise the use of any of the new vaccines coming to the market. For many countries in the region, there are no physical stocks of vaccines, even if stocks have been "secured" on paper. This clearly prevents the rollout from proceeding at speed.

And until that happens, even though there are some good things happening in some sectors, for example, technology exports, which are important for the region, the broader recovery which will involve opening up the service sector, and international travel and hospitality can hardly be said to be gaining pace on a regional basis. With the exception of China, pre-Covid levels of activity remain a distant goal. A double-dip recession may be avoided, but we switched Asia (ex-China) to our second, less favourable scenario last month, and we are not going to change it back again this month and probably not next either.

With vaccine rollout likely to remain slow until 2Q 2021, Asia's recovery to pre-Covid levels is likely to remain subdued until later this year.