Governments across Southeast Asia are confronting surging COVID-19 outbreaks, including in countries that were largely successful at limiting domestic outbreaks in 2020. Health authorities have responded by instituting aggressive containment measures and increasing investments for rolling out COVID-19 vaccines. However, governments across the region will struggle to achieve high vaccination rates in the short term, thus driving growing pressures on public and private healthcare systems. 

Elective surgery levels have been further delayed or disrupted in recent months, and the recovery of medical tourism this year remains unlikely. Healthcare funding outlooks in the region are diverging, with some governments continuing to focus attention and budget share on the COVID-19 response, while others are setting the stage for a full-scale recovery of healthcare expenditures across therapy areas. 

Demand recovery in ASEAN will be undermined by persistent COVID-19 outbreaks and a slow vaccine rollout. The recovery path for Southeast Asia’s healthcare spending will remain challenging as countries confront unexpectedly strong COVID-19 outbreaks, while prospects for rapid vaccination of at-risk populations remain uncertain. Companies should expect health expenditure growth to gather strength into the second half of 2021. 

Ministry of Health budgets will experience widely divergent boosts this year. Most health ministries across the region received spending boosts in 2021 budgets, but governments prioritized COVID-19 vaccine purchases and broader infrastructure projects to accelerate an economic recovery. Governments and social security institutions have also sought more flexible budgets to confront shifting disease burdens and uncertain procedure and outpatient treatment volumes.  

Recovery of private healthcare demand will require progress on COVID-19 vaccinations. Overall private healthcare spending will recover once COVID-19 infection rates decrease, and medical tourism will recover once global vaccination levels improve markedly, delaying recovery in markets such as Malaysia and Thailand. This will create financing pressures on private hospitals that will lead to delayed capital expenditures and eventual consolidation in the sectors.  

For further insights on our expectations for a recovery in ASEAN’s economic growth, measures affecting consumer and business sentiment, and key macropolitical risks for businesses in 2021, watch the full webinar presentation from CEO, Richard Leggett, and Senior Analyst, Ashu Agarwal, on the outlook for Southeast Asia. 

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