Economic recovery in CLMV countries (Cambodia, Laos, Myanmar and Vietnam) depends on their ability to contain the second wave of the COVID-19 pandemic, according to a report from Maybank Kim Eng.

Analysts Linda Liu and Chua Hak Bin kept their forecast for Vietnam’s GDP growth
at +2.9% for 2020.(Photo: VNA)

Analysts Linda Liu and Chua Hak Bin kept their forecast for Vietnam’s GDP growth at +2.9 % for 2020 but lowered projections for Cambodia, Myanmar, and Laos. Cambodia specifically will slip into a shallow recession in 2020 (-1 %) followed by a +5.9 % growth recovery in 2021, they said. 

Meanwhile, while Myanmar and Laos may avoid a recession; however, the recovery remains tentative because of a second wave of COVID-19 infections. 

Myanmar is the latest hotspot within CLMV as a “monstrous second wave” of the pandemic swept the country since late August. As of October 18, COVID-19 cases in the country totaled 34,875, with 838 deaths. The country has since re-imposed domestic travel curbs and placed Yangon and nearby provinces under lockdown. Most garment factories in Yangon have also been ordered to shut down until October 20. 

The report stated that Myanmar’s 2020 general elections, which are slated for November 8, takes place when the country is facing a major second wave of COVID-19 infections. Therefore, they may increase healthcare risks, worsen the spread and derail the economic recovery.

Overall, inflation remains positive across the CLMV economies despite the downturn, with Laos’ inflation elevated at above +5 % amid higher food prices and weaker currency.

The analysts raised inflation forecasts for Laos (+5.5 % in 2020 and +4.2 % in 2021) and Cambodia (+2.8 % in 2020 and  +2.7 % in 2021), but lowered it for Myanmar (+5.8 % in 2020). They maintained their headline CPI forecasts for Vietnam at +3.3 % in 2020 and +3 % in 2021.

CLMV currencies saw diverging trends, with strong appreciation in Myanmar kyat (+11.5 % YTD against the USD) but depreciation in the Laos kip (-3.9 %). Vietnam dong (+0.02 %) and Cambodia riel (-0.9 %) were largely stable.