Technology Sector Battling Delta Variant
The Delta variant is posing a threat to the region that has been most effective at mitigating the economic impact of COVID-19, with Asian countries that wiped it out shutting down anew as the virus resurfaces and others seeing the worst mortality rates in the world.
Only a year ago, the Asia-Pacific region’s fast containment of COVID-19 made it the envy of the globe, as the virus decimated the United States and Europe. From Seoul to Sydney, Bangkok to Beijing, authorities are re-imposing growth-stifling restrictions as a result of poor vaccination rates in several of those cities.
Consumers, manufacturers and industrial engineering companies have borne the burden thus far. Australia’s central bank estimates that spending declines by roughly 15% during lockdowns, where two-thirds of the population is kept at home after Delta sneaked through the country’s rigorous travel quarantine system.
China is implementing internal travel and movement restrictions in the midst of the summer holiday as the virus spreads to cities, such as Wuhan and Beijing, triggering downward revisions to China’s gross domestic product (GDP) predictions. The country reported 95 new local coronavirus cases, with the Delta Variant virus spreading to regions accounting for 38% of the country’s GDP.
Supply lines from Vietnam to Thailand, where outbreaks are escalating, have been disrupted as well, with manufacturing companies producing items for Nike Inc. and Adidas AG shutting down due to virus restrictions, risking missing out on the critical holiday shopping season. This increases the likelihood that Asia’s Delta shock would reverberate globally if exports are delayed longer term.
Across the East China Sea, the Delta outbreak in China is escalating economic concerns in the second half, following a fatal flood and a slowdown in exports and investment. Social distancing measures are expected to impact on a shaky retail spending rebound over the prime summer vacation season.
Meanwhile, the argument over whether to shut down is particularly contentious in Thailand and neighboring Vietnam, where commerce has been one of the few bright spots in the economy. The Federation of Thai Industries has warned that labor shortages caused by quarantines and movement restrictions are driving businesses to curtail production.
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