On January 28, BNP Paribas, the world's fourth largest bank, said that in its ASEAN Outlook 2021 report, the biggest risks to medium-term growth in the region has overcome the worst condition. Realizing that Covid-19 cases has increased in the past few weeks, with movement restrictions of varying degrees in place in Indonesia, Malaysia and Thailand, it is noted that the great risk are great with potentially fragile household and business balance sheets.

Even as households and businesses are optimistic that the Covid-19 pandemic will subside in the second half of the year, financial difficulties are still present. Banks may become even more risk-averse as they spread credit. Furthermore, there could be social consequences as a result of damage to the balance sheet in favor of poorer households and small and medium-sized enterprises. Overall, the ASEAN Outlook 2021 report expects a "rapid recovery" for the region, as domestic demand is likely to be constrained by the need to rebuild household savings. The combination of a mild rebound and increased solvency risks means demand for stimulus and support will remain.

ASEAN economic outlook 2021:

The most difficult period has passed. With limited space, fiscal accounts are likely to consolidate and the stimulus move could translate to monetary policy. BNP Paribas expects rate cuts in both Indonesia and Malaysia in 2021, and quantitative easing on some of the targeted measures in Thailand. Even in the event of unexpected inflationary pressures from higher food or energy prices, it is unlikely that ASEAN central banks will raise interest rates. Having weathered the most difficult period, Asian companies are the most optimistic about the outlook for the next six months with 101 businesses surveyed across 11 Asia-Pacific countries.

About half (44%) of the companies surveyed are positive about their prospects for the next six months, with about 58% of companies that did not hire or lay off staff this quarter, and a fifth said the staffing level was lower. Experts also said that, while there is still some uncertainty, these numbers showed that the recovery is happening very quickly and many businesses feel more confident. While the US and UK have already begun increasing vaccination coverage, some Asian countries expect to receive substantial doses of the vaccine in the coming weeks, with Singapore having receved its first shipment of the Pfizer-BioNTech vaccine on January 25 2021.

This is the first Asian country to receive this vaccine. About 25% of businesses are most concerned about job cuts, which will affect consumption. After a year marked by an economic slowdown, 2021 is billed as the 'year of the phoenix', with a strong recovery in global gross domestic product and corporate earnings, with thanks to the launch of vaccines and substantial policy support.