Malaysia to lead Asia's 'Great Reopening'

Most APAC economies are shifting towards living with COVID, but the easing of restrictions can be expected to vary across the region. Malaysia, Australia, and New Zealand are best placed to reopen given their progress on vaccination, falling or low case numbers, and relatively large tourism sectors.

According to research by Oxford Economics, all three would also experience strong gains from an easing of curbs, given recent lockdowns.

The economic imperative for Thailand and the Philippines to ease limitations is high, given their dependency on tourism and the mounting economic cost of restraints. This is driving policymakers to reopen borders, but domestic restrictions are likely to be eased gradually given low vaccination rates.

Despite its high vaccination rates and low case numbers, the strength and size of China’s domestic economy means there is less pressure to reopen. Indeed, China is expected to stick to its zero-COVID policy until H2 2022 at least.

In the case of India, while it ranks low in terms of the pace of future reopening, the ranking partly reflects that the country is well ahead of the region, as there are already now very few constraints in place.

For several economies, low political and public tolerance towards COVID will mean it takes longer to return to normal. Singapore and New Zealand both score highly in this regard, but in Singapore the latest retightening and extension of domestic mobility restrictions suggests that the transition to living with COVID will be slow. That said, the authorities have significantly relaxed border controls.

New Zealand may have abandoned its elimination strategy, but it also has set a high vaccination target of 90% of the eligible population (>12 years) before restrictions are eased.

The reopening of borders will help boost services activity next year. However, while a rebound in tourism is expected, international visitors may not return to prepandemic levels until 2025.

In part, this reflects consumer hesitancy in the short term, as well as significantly lower Chinese tourism numbers compared to 2019, as China’s quarantine requirements for returning travellers will likely continue to deter international travel.

As a result, heavily tourism-dependent Thailand is expected to experience significant economic scarring from the pandemic.