Recovery in CLMV countries will be slow and choppy, with binary risks, conditional on containing a “second wave” said Maybank Kim Eng in a report on Monday.

Analysts Linda Liu and Chua Hak Bin maintained VIetnam’s GDP growth at +2.9 per cent for 2020 but lowered their forecasts for Cambodia, Myanmar, and Laos. Cambodia specifically will slip into a shallow recession in 2020 (-1 per cent) followed by a +5.9 per cent growth recovery in 2021, they said.

Meanwhile, while Myanmar and Laos may avoid a recession, the recovery remains tentative because of a second wave of Covid-19 infections.

Myanmar is the latest hotspot within CLMV as a “monstrous second wave” swept the country since late August. As of Oct 18, Covid-19 cases totaled 34,875, with 838 deaths. The country has since reimposed domestic travel curbs and placed Yangon and nearby provinces under lockdown. Most garment factories in Yangon have also been ordered to shut down until October 20.

Specific to Myanmar’s upcoming 2020 general elections which are slated for Nov 8, the report stated that they see low political risk and do not expect major changes in the election outcomes or policy direction. But holding the elections at a time when Myanmar is facing a major second wave may increase healthcare risks, worsen the spread and derail the economic recovery.

Overall, inflation remains positive across the CLMV economies despite the downturn, with Laos’ inflation elevated at above +5% amid higher food prices & weaker currency. The analysts raised inflation forecasts for Laos (+5.5 per cent in 2020 and +4.2 per cent in 2021) and Cambodia (+2.8 per cent in 2020 and +2.7 per cent in 2021), but lowered it for Myanmar (+5.8 per cent in 2020). They maintained their headline CPI forecasts for Vietnam at +3.3 per cent in 2020 and +3 per cent in 2021.

CLMV currencies saw diverging trends, with strong appreciation in Myanmar kyat (+11.5% YTD against the USD) but depreciation in the Laos kip (-3.9%). Vietnam dong (+0.02%) & Cambodia riel (-0.9%) were largely stable.