Impact of Covid-19 on the Economic Growth of ASEAN Countries: Convergence or Divergence?

Abstract This contribution addresses the question of whether economic growth among ASEAN member countries is converging or diverging within the context of the COVID-19 pandemic. ASEAN has significantly developed economic and social mechanisms aimed at achieving greater integration among member countries, with the goal of enhancing economic growth and especially accelerating the catch-up of the poorer member countries. How resilient have the member countries been? Has the COVID-19 pandemic more severely affected the poorer member countries? To answer these questions, our contribution addresses this issue based on economic growth theories, particularly drawing on Solow’s theory regarding beta and gamma convergence. The study covers the period from 2000 to 2022. In the pre-pandemic period from 2000 to 2019, there is a general phenomenon of absolute convergence, demonstrating a reduction in the disparity in absolute values between less advanced and more modern countries, which also leads to a reduction in inequality as shown by the confirmation of the σ-convergence hypothesis. This is true for both GDPC and GDPW variables. The catch-up effect of absolute β-convergence is not evident when looking at the period from 2020 to 2022. During this timeframe, both the absolute β-convergence and σ-convergence hypotheses are rejected, which slows down the economic growth of poorer economies relative to the more advanced ASEAN countries. Overall, the entire 2000–2022 period confirms the unconditional β-convergence and σ-convergence assumptions of the pre-pandemic period.