Firms continue to reflect on what the economic and markets outlook is for the rest of 2021 and into next year. One salient point in this example is how uneven Asian countries' performance has been.

Growth in Asia hasn’t been as sensitive to COVID-19 and associated restrictions as might have been the case as vaccines, monetary and fiscal policy have taken hold, but the speed of countries' recovery has nevertheless been uneven, according to PineBridge Investments. 

The pace of recovery will be set by China, and the Asian giant has expanded its growth to a faster rate than before the pandemic broke out, the firm said in a note.

“More than a year after the initial outbreak, COVID-19 continues to hang over Asian growth. The rise in cases in India dominated global headlines for weeks during the first half of the year and led to a fresh set of lockdowns in the country. Even outside of India, countries that seemed to do well in containing the virus in 2020 have come under pressure, including Malaysia, Thailand, and Philippines, where cases are reaching new highs in 2021,” PineBridge said.

“North Asian economies like Taiwan and Japan also suffered harsher outbreaks in 2021. In Japan’s case, the situation has called into question the viability of the Tokyo Summer Olympics, which had already been delayed one year. That said, growth seems to be much less sensitive to lockdowns compared to 2020,” it said.

PineBridge adds its voice to a number of banks issuing mid-year updates to its forecasts and asset allocation views. See a recent example here from Deutsche Bank.

The firm noted that global growth is running at a much stronger pace, with much of the world still benefiting from the “powerful, unprecedented combination of fiscal and monetary stimulus packages.”

The uncertainty factor from the virus has fallen “dramatically” because medical professionals and policymakers now know what to expect, and the relief of having several vaccines available has buoyed both business and consumer confidence.

“Empirically, India is an example of relative growth resilience. Despite the surge of cases in India, and the significant human toll of the virus, targeted lockdowns and relatively less stringent measures have had a more muted impact on economic indicators like industrial production this year than last,” PineBridge said. 

“However, much more progress needs to be made. The vaccination rollouts, a sterling achievement in the UK and the US, where a majority of adults have been vaccinated, have lagged in Asia. The UK and the US have both given out more than 90 doses per 100 people, while China, in contrast, has delivered 44, Japan around 19, India just 18, and Taiwan a measly 3.6. Vaccinations are seen as key to the revival of intra-regional travel, with countries easing entry restrictions for the vaccinated, and greater mobility would help small businesses that have relied on foot traffic,” it added.

Chart on vaccination rates:

Source: PineBridge