Coronavirus: Asia’s economic recovery losing momentum as Delta variant knocks wind out growth

The rapid spread of the highly infectious Delta variant and low vaccination rates have caught much of Asia off guard

While year-on-year corporate and economic indicators continue to show strong recovery, quarter-on-quarter indicators reveal flagging momentum

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Toyota, the world’s largest carmaker by sales volume, said last week it would cut September production by 40 per cent from its previous plan due to the chip crunch, though it retained production and sales targets for its financial year. Photo: AP

Published: 3:30pm, 24 Aug 2021Updated: 3:57pm, 24 Aug 2021

Asia’s robust economic recovery from last year’s coronavirus low is losing momentum as a surge in Covid-19 cases sees shops empty again and factories close, dimming prospects for corporate profit growth after a blockbuster half year.

The rapid spread of the highly infectious Delta variant of the coronavirus and low vaccination rates have caught much of the region off guard, especially in emerging markets, even as economies in Europe and North America reopen.

“It’s clear that economies across the region are suffering more from Covid-19 than they previously did. The biggest factor is that Asia is poorly vaccinated,” said Rob Carnell, Asia-Pacific head of research at ING in Singapore.

While year-on-year corporate and economic indicators continue to show strong recovery, flattered by comparisons with 2020s sharp declines, quarter-on-quarter indicators reveal flagging momentum.

There’s no mistake there will be a slowdown in the third quarter,

Norihiro Fujito

Asia’s biggest firms are likely to post their first quarter-on-quarter profit decline in six quarters in July-September, falling 6.19 per cent, showed a Reuters calculation based on Refinitiv Eikon analyst data of 1,069 companies with market capitalisation of at least US$1 billion.