• 29. April 2020
  • 11:40
  • Economy

Coronavirus’s effect on Southeast Asia’s economies delayed

According to Ralf Schmidt, Hamburg-Ambassador in Singapore, the port of Singapore does not report a decrease in freight volumes for the first quarter of 2020. The same is the case for most freight traffic throughout Southeast Asia. Cargo was booked and shipped before the brute of the corona pandemic hit in shipping. The effects will only be noticeable from April onwards, especially on routes to Europe and America, but increasingly also in intra-Asian traffic. According to Ralf Schmidt, it is currently very difficult to estimate the virus’s impact on the overall economic performance in Southeast Asia. He therefore refers to the general forecasts of the International Monetary Fund (IMF) as a foundation for economic forecasts.
 
Production
All Southeast Asian countries are experiencing restrictions due to the pandemic since most of them are currently under lockdown. The lockdown affects both the industrial as well as the service sector equally. Production is only permitted to a small extent. From 7 Apr 2020, Singapore entered the so-called circuit breaker period, in order to pre-empt escalating corona infections. During this time, Singaporeans are advised to stay home as much as possible. The circuit breaker was meant to last till May 4, but on April 21, the Singaporean government extended the measures till June 1 and tightened existing rules once more. This decision leads to further restrictions for basic and systemically relevant services so that, even in these sectors, at least 85 percent of work must be done from home.

Economically strong countries such as Singapore, Malaysia, Vietnam, Indonesia and the Philippines are now increasing pre-emptive measures that are already in place. In general, industrial production in Southeast Asia is currently at 40 to 60 percent of its previous capacity. An increase in production can be observed for medical equipment as well as cleaning and personal care products.
 
Freight transport
The Corona pandemic affects all modes of freight transport in Singapore, although road transport only plays a role in domestic trade and foreign trade with neighboring countries. Here, the operating hours of border crossings are currently restricted so that trucks can only cross the border between, for example, Malaysia and Singapore from 7 am to 7 pm.
90 percent of the Southeast Asian aviation sector is grounded right now leading to three times the usual rates for air freight in some cases.  Singapore Airlines, among others, have converted passenger planes into cargo planes to add transport capacities in the passenger cabins.
 
Blank Sailings
The initial backlog in Chinese ports, especially for reefer containers, was quickly cleared. However, containers are still waiting to be filled in Asia. The global decline in demand, particularly in Europe and America, is causing concern for the Asian economy. In addition to reduced or stopped production, low demand is another reason why it will take months to have enough containers back in circulation. Since the beginning of April, the low demand has led to an increase in blank sailings, which resulted in a shortage of containers in some Central European countries.
 

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