If 2022 could be characterised in a few words, many Southeast Asians would characterise it as a year of partial but not fully realised recovery.  

Following two years of COVID lockdowns, 2022 ushered in a breath of fresh air, quite literally, with many ASEAN countries lifting mask mandates and travel restrictions.  

In year-end polling conducted by Blackbox Research and ADNA covering over 9,000 respondents from key Southeast Asian countries—Singapore, Malaysia, Indonesia, Philippines, Thailand, and Vietnam—just over 1 in 3 Southeast Asians said they felt things moved forwards in their country over 2022.  

Singaporeans were the most optimistic with 51% saying their country went forwards while Filipinos were least positive at just 20%.  

Factors Driving Optimism in the Region 

Not surprisingly, any forward momentum felt by Southeast Asians (29%) largely stems from the handling of the Covid-19 pandemic. Comparatively, the region has emerged better than others although hot spots do keep arising.  

Indonesia, for example, has been highly successful in mitigating the spread of the virus as local governments and community organisations pushed for vaccinations programmes and dispersing federal government aid to low-income groups across the archipelago. Meanwhile, Singapore has just announced the development of 5 vaccine plants in the city-state as pharmaceutical companies diversify their drug manufacturing capabilities.  

ASEAN remains among the fastest growing regions globally in 2022, with estimates placing the region to grow by 5.5% in 2022. It is unsurprising then that the economy and employment were things that moved forward for 22% of Southeast Asians in 2022.  

Nearly half (46%) of Vietnamese attributed their country’s progress to ensuring job opportunities for its people. Both national and local government efforts to promote tourism and the service industry and the focus on promoting primary industries such as agriculture, fisheries and forestry have allowed Vietnam’s labour market to recover rapidly in the last year.  

Filipinos at 37% also think their economy has some momentum. Buoyed by the removal of border restrictions, government spending on infrastructure has helped spur the tourism and services industry in the country. But overall, Filipinos are still least likely of all SE Asians to feel their country moved forwards in the last 12 months. 

Reasons to be (less) cheerful 

Even as the region continued to make progress in its handling of COVID, Southeast Asians were more still more circumspect about economic prospects throughout 2022.  New pressures undercut the recovery. 

Inflation (44%) and rising interest rates (42%) were identified as the major countervailing factors to Southeast Asia’s progress. Indeed, the spectre of rising prices across the board – online and offline – has impacted almost every household across the region. 

Southeast Asia has long been associated with trade, which has formed the basis of much of the region’s economic activity. Inflation can be a killer to trade as rising inflation levels weakens the trade balance between exporters and importers. Production and labour costs also rise and ultimately lead to a decline in exports.  

Rising costs also raise prices of most goods and services for end-consumers, and therefore many in the region are spending less and saving more. At well over half (55%), Singaporeans rank Inflation as the top reason for the country going backwards in 2022.  Add to all this the fallout from increased government spending during the pandemic, the Russia-Ukraine conflict, and a long pandemic recovery curve in China, and it is clear that 2022 was the year when inflation again reared its ugly head for the first time in several generations. 

Rising interest rates also dampens economic activity as it becomes costlier for businesses and consumers to take out a loan. This causes a decline in domestic consumption and slower business investment, a painful struggle for Vietnamese and Indonesian businesses looking to leverage on their countries’ recovery potential.   

While Southeast Asians expected their national governments to get a grip on COVID after 2 years, the neutral economic sentiments indicate that governments will need to be proactive trying to rein in inflation, provide job opportunities, and manage rising costs of living in 2023.  

As Southeast Asian countries recover from their Covid woes, economic concerns dominate the minds of most in the region. To learn more about how governments and businesses can navigate the economic instability post-2022, reach out to us on connect@blackbox.com.sg