Southeast Asia could be badly affected if the U.S. falls into recession, but some countries will be hit harder than others, economists told the news portal CNBC.
The U.S. has already seen two consecutive quarters of negative growth in the first two quarters of 2022, which some see as a “technical” recession, noting the possibility of a full-blown recession there, the report said.
In Southeast Asia, Singapore and Thailand are likely to bear the brunt if the U.S. fails to recover from the decline.
small export-oriented economy
Chua Hak Bin, senior economist at Malaysia’s Maybank Singapore branch, said Singapore is “more vulnerable” than its regional peers because its small economy is “very, very dependent” on exports.
Chua explained that Singapore does not have much of a domestic market and its economic growth relies heavily on traded services. This includes shipping activities and freight operations.
Irvin Seah, senior economist at DBS Group Research, said the city-state was so interconnected with the rest of the world that a “shock wave” in any country would certainly have a knock-on effect CNBC.
Thailand’s tourism industry relies on
Thailand would also be one of the first countries to be affected if the U.S. fell into a recession, as the country’s economic growth relies heavily on tourism.
Tourism spending accounted for about 11 percent of Thailand’s GDP in 2019, but unofficial figures must have been much more before the Covid-19 pandemic. The country received nearly 40 million tourists that year, generating more than $60 billion in revenue, according to the World Bank.
But with only about 428,000 foreign tourists arriving in 2021, the country’s economy will grow just 1.5%, one of the slowest in Southeast Asia, according to Reuters. Between 2022 and September, only 5 million foreign tourists will arrive.
The Chinese can come to the rescue
After Singapore, Thailand could be the next country to slip into recession, Chua said. However, he added that the timing of China’s reopening will be an “uncertainty” that could determine whether Thailand’s economy “recovers fully”.
“As long as Chinese tourists don’t come back, Thailand will continue to struggle. Growth is weak, inflation is high and the baht is under pressure,” he said.
Thailand’s inflation rate is another concern as it hit a 14-year high of 7.66% in June, according to financial market intelligence firm Refinitiv.
Indonesia, Philippines in better position
In turn, Chua noted that Indonesia and the Philippines are likely to be less affected by the U.S. recession due to “domestic-oriented economies.”
“Indonesia and the Philippines are more immune to slowing external demand and the U.S. recession, and both economies continued to expand even during the 2008/09 global financial crisis,” he said.
Asok intersection in the main business district of Bangkok Economists told news portal CNBC that Southeast Asia could be badly affected if the U.S. slipped into recession, but some countries would be hit harder than others. The U.S. has already seen two consecutive quarters of negative growth in the first two quarters of 2022, which some see as a “technical” recession, noting the possibility of a full-blown recession there, the report said. In Southeast Asia, Singapore and Thailand are likely to bear the brunt if the U.S. fails to recover from the decline. small,…
Southeast Asia could be badly affected if the U.S. falls into recession, but some countries will be hit harder than others, economists told the news portal CNBC.
The U.S. has already seen two consecutive quarters of negative growth in the first two quarters of 2022, which some see as a “technical” recession, noting the possibility of a full-blown recession there, the report said.
In Southeast Asia, Singapore and Thailand are likely to bear the brunt if the U.S. fails to recover from the decline.
small export-oriented economy
Chua Hak Bin, senior economist at Malaysia’s Maybank Singapore branch, said Singapore is “more vulnerable” than its regional peers because its small economy is “very, very dependent” on exports.
Chua explained that Singapore does not have much of a domestic market and its economic growth relies heavily on traded services. This includes shipping activities and freight operations.
Irvin Seah, senior economist at DBS Group Research, said the city-state was so interconnected with the rest of the world that a “shock wave” in any country would certainly have a knock-on effect CNBC.
Thailand’s tourism industry relies on
Thailand would also be one of the first countries to be affected if the U.S. fell into a recession, as the country’s economic growth relies heavily on tourism.
Tourism spending accounted for about 11 percent of Thailand’s GDP in 2019, but unofficial figures must have been much more before the Covid-19 pandemic. The country received nearly 40 million tourists that year, generating more than $60 billion in revenue, according to the World Bank.
But with only about 428,000 foreign tourists arriving in 2021, the country’s economy will grow just 1.5%, one of the slowest in Southeast Asia, according to Reuters. Between 2022 and September, only 5 million foreign tourists will arrive.
The Chinese can come to the rescue
After Singapore, Thailand could be the next country to slip into recession, Chua said. However, he added that the timing of China’s reopening will be an “uncertainty” that could determine whether Thailand’s economy “recovers fully”.
“As long as Chinese tourists don’t come back, Thailand will continue to struggle. Growth is weak, inflation is high and the baht is under pressure,” he said.
Thailand’s inflation rate is another concern as it hit a 14-year high of 7.66% in June, according to financial market intelligence firm Refinitiv.
Indonesia, Philippines in better position
In turn, Chua noted that Indonesia and the Philippines are likely to be less affected by the U.S. recession due to “domestic-oriented economies.”
“Indonesia and the Philippines are more immune to slowing external demand and the U.S. recession, and both economies continued to expand even during the 2008/09 global financial crisis,” he said.
