CLMV Outlook by EIC Q1/2020

CLMV economies proved their resiliency during the global trade tension period in 2018-19, supported by strong domestic demand. However, EIC believes the   COVID-19 outbreak has changed the CLMV economic outlook materially in 2020F, given falling external demand from a deep global recession and weakening domestic demand from lockdown measures and employment slowdown. The slowdown is expected to be broad-based, affecting CLMV economies through five key economic channels, including 1) exports, 2) supply chain disruption, 3) tourist arrivals, 4) foreign direct investment (FDI), and 5) private consumption. In addition, each country faces their own country-specific risks. As a result, EIC has substantially revised down 2020 GDP forecasts for all four countries. To shore up growth, accommodative fiscal and monetary policy responses have been introduced and are likely to continue. On the recovery path, given country-specific challenges and an expected U-shaped recovery in global growth, EIC believes CLMV economic recovery in 2H20 is likely to be gradual. With uncertainty regarding the containment of COVID-19, our forecasts are subject to further downside risks.