The delta has slowed down the great recovery of the Asian economy

The robust recovery of the Asian economy from last year's downturn due to restrictions on stopping the new coronavirus pandemic is losing momentum. The reason is the spread of the more contagious delta variant and the low vaccination rate. The shops are empty again and the factories are closing. This worsens the growth prospects of Asian companies. A new wave of pandemics has hit most of the region unprotected, especially emerging economies, while Europe and North America are reopening. "Obviously, economies across the region are suffering more from Covid-19 than before," said Rob Carnell, head of research at ING in Singapore, who said the biggest problem was that Asia was poorly vaccinated. While year-on-year business and economic indicators continue to show a strong recovery compared to their sharp decline in 2020, quarter-on-quarter indicators reveal weakening dynamics. The largest Asian companies are likely to record the first quarter-on-quarter decline in profits in the current quarter (July-September). Analysts at Refinitiv Eikon, based on a survey of 1,069 companies with a market capitalization of at least $ 1 billion (€ 853.39 million), estimate this decline to be 6.19% on average. In the short term, much will depend on progress in vaccination in Southeast Asia, the main manufacturing base, and whether China is taking further steps to support its economy. Analysts point out that car sales in China, the world's second largest economy, fell by 11.9% year on year in July. It was the third month in a row that it had shrunk as a result of a new wave of pandemics and a global shortage of semiconductors that is limiting production. Toyota Motor, the world's largest carmaker by sales volume, announced last week that it would reduce September production by 40% from a previous plan due to a lack of chips. For the time being, however, it has left production and sales targets for the current fiscal year unchanged.