Defense spending

WEAPONS, VIRUSES, AND THE NEW DEFENSE REALITY IN SOUTHEAST ASIA

The economies of Southeast Asia are in for a hard hit. No country in the region, save for Singapore, has sufficient capital for a large-scale stimulus program to bolster the region’s limited social safety nets. Every government is bracing for economic recessions and large budget deficits. Malaysia expects its economic growth in 2020 to contract by 5.9 percent, Thailand by 5.3 percent, Singapore by 4 percent, Indonesia by 2.5 percent and the Philippines by 1 percent. Only Vietnam is expected see positive, albeit slower growth, at 4.9 percent.

The pandemic and the looming global economic recession will negatively impact travel and tourism, which so many Southeast Asian economies depend on. China is coping with its own slowdown, a 6.8 percent contraction in first quarter GDP, with some estimates of 20 percent unemployment and massive decreases in exports. China will almost certainly buy less from Southeast Asia, invest less, and dispatch fewer tourists. A U.S. recession will have a similar impact.

Southeast Asian states will be coping with unemployment, food insecurity, and a decline in foreign investment and exports. The global economic downturn, coupled with a surge in anti-immigrant sentiment, will also have a major impact on the region’s migrant workers, whose remittances are so critical to their home states’ economies. That, in turn, will drive down domestic consumption. All of these developments will have knock-on effects on other sectors of the economy, including the banking, real estate, and service industries.