Outbreaks of covid-19 leave South-East Asia with little policy room

LAST YEAR many South-East Asian countries were praised for preventing large outbreaks of covid-19, even as they recorded sharp declines in output. They have not escaped unscathed this year. While widespread vaccination may limit the spread and the severity of the Delta variant in much of the rich world, the vast majority of South-East Asians are still unjabbed. Indonesia, Malaysia, Myanmar and Thailand are reporting more cases than ever. New daily cases in Vietnam are three times higher than the annual total for 2020.High-frequency indicators suggest that the surge in cases has knocked economic activity. Daily mobility figures from Google suggest that people in Indonesia and Vietnam are spending more time at home than they did during the outbreaks of last summer. The most reliable indication of the scale of the economic impact may come from Malaysia, which was hit by a fresh outbreak a little before its neighbours. There the manufacturing purchasing-managers’ index, a gauge of activity in the sector, fell to 39.9 in June, the lowest since April 2020. (A figure below 50 indicates contraction.)