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2021 Economic Outlook for Southeast Asia, China and India 2021

Reallocating Resources for Digitalisation

image of Economic Outlook for Southeast Asia, China and India 2021

The Economic Outlook for Southeast Asia, China and India is a regular publication on regional economic growth, development and regional integration in Emerging Asia. It focuses on the economic conditions of Association of Southeast Asian Nations (ASEAN) member countries: Brunei Darussalam, Cambodia, Indonesia, Lao PDR, Malaysia, Myanmar, the Philippines, Singapore, Thailand and Viet Nam. It also addresses relevant economic issues in China and India to fully reflect economic developments in the region. The Outlook comprises two main parts, each highlighting a particular dimension of recent economic developments in the region. The first part presents the regional economic monitor, depicting the economic outlook and macroeconomic challenges in the region. The second part consists of a special thematic chapter addressing a major issue facing the region. The 2021 edition of the Outlook addresses reallocation of resources to digitalisation in response to COVID-19, with special focuses on health, education and Industry 4.0. During the COVID-19 crisis, digitalisation has proved critical to ensuring the continuity of essential services. The use of e-commerce, digital health tools and on-line education all accelerated sharply during the pandemic in Emerging Asia. However, there is still a lot of work to be done, for the region to be able to get the full benefits of digitalisation.

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Macroeconomic assessment and economic outlook in Emerging Asia

Emerging Asian economies – ASEA N, China and India, are in the midst of their deepest recession in decades. The downturn is expected to be widespread across demand components, with the exception of government consumption that was supported by substantial budgetary stimulus. Economies heavily dependent upon tourism and exports have been particularly affected by the pandemic-induced global recession. Inflation is expected to remain subdued, while unemployment soars and budget deficit and debt rise sharply. A recovery is anticipated to gradually take hold on the back of favourable financing conditions and supportive macroeconomic policies. Substantial uncertainties regarding the outlook prevail as the health crisis continues to unfold in most countries in Emerging Asia and globally. Policy makers in the region need to continuously strengthen the capacity of their health care systems to withstand potential new waves of the pandemic or more virulent strains. As monetary and fiscal space have narrowed appreciably, the focus in 2021 should be on improving monetary policy transmission and making fiscal spending more targeted.

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