Southeast Asia could be badly affected if the U.S. slips into recession, but some countries will be hit harder than others, economists told the news portal NBC Finance Channel.
The U.S. has already reported two consecutive quarters of negative growth in the first two quarters of 2022, in what some see as a “technical” recession, noting a full-blown recession is possible there, the report said.
In Southeast Asia, if the US fails to recover from the downtrend, Singapore and Thailand are likely to be hit first.
Small export-oriented economy
Cai Xuebin, senior economist at Maybank Malaysia’s Singapore branch, said Singapore was “more vulnerable” than its regional peers because its small economy was “very, very dependent” on exports.
Chua explained that Singapore does not have much of a domestic market and relies heavily on trade services to boost economic growth. This includes shipping activities and freight operations.
Irvin Seah, senior economist at DBS Group Research, said the city-state was also very connected to the rest of the world, and a “shock wave” in any country was sure to have a knock-on effect. NBC Finance Channel.
Tourism Dependence in Thailand
Thailand would also be one of the first to be affected if the U.S. falls into recession, as the country relies heavily on tourism for economic growth.
Tourism spending accounted for about 11% of Thailand’s GDP in 2019, but before the Covid-19 pandemic, it was unofficially certainly more. According to the World Bank, the country welcomed nearly 40 million tourists that year, generating more than $60 billion in revenue.
But with only about 428,000 foreign tourists arriving in 2021, the country’s economy will grow just 1.5 percent, one of the slowest in Southeast Asia, according to Reuters. From 2022 to September, only 5 million foreign tourists will arrive.
Chinese may come to the rescue
After Singapore, Thailand could slip into recession, Chua said. However, the “wildcard” would be the timing of China’s reopening, which could determine whether Thailand’s economy has a “full recovery,” he added.
“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.
Inflation in Thailand, which hit a 14-year high of 7.66 percent in June, is another concern, according to financial market intelligence firm Refinitiv.
Indonesia, the Philippines are in a better position
In turn, Chua noted that Indonesia and the Philippines may be less affected by a potential U.S. recession due to their “domestic-oriented economies.”
“Indonesia and the Philippines are more immune to the slowdown in external demand and the recession in the US, both economies that 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 if the United States slips into recession, Southeast Asia could be badly affected, but some countries will be hit harder than others. The U.S. has already reported two consecutive quarters of negative growth in the first two quarters of 2022, in what some see as a “technical” recession, noting a full-blown recession is possible there, the report said. In Southeast Asia, if the US fails to recover from the downtrend, Singapore and Thailand are likely to be hit first. small,…
Southeast Asia could be badly affected if the U.S. slips into recession, but some countries will be hit harder than others, economists told the news portal NBC Finance Channel.
The U.S. has already reported two consecutive quarters of negative growth in the first two quarters of 2022, in what some see as a “technical” recession, noting a full-blown recession is possible there, the report said.
In Southeast Asia, if the US fails to recover from the downtrend, Singapore and Thailand are likely to be hit first.
Small export-oriented economy
Cai Xuebin, senior economist at Maybank Malaysia’s Singapore branch, said Singapore was “more vulnerable” than its regional peers because its small economy was “very, very dependent” on exports.
Chua explained that Singapore does not have much of a domestic market and relies heavily on trade services to boost economic growth. This includes shipping activities and freight operations.
Irvin Seah, senior economist at DBS Group Research, said the city-state was also very connected to the rest of the world, and a “shock wave” in any country was sure to have a knock-on effect. NBC Finance Channel.
Tourism Dependence in Thailand
Thailand would also be one of the first to be affected if the U.S. falls into recession, as the country relies heavily on tourism for economic growth.
Tourism spending accounted for about 11% of Thailand’s GDP in 2019, but before the Covid-19 pandemic, it was unofficially certainly more. According to the World Bank, the country welcomed nearly 40 million tourists that year, generating more than $60 billion in revenue.
But with only about 428,000 foreign tourists arriving in 2021, the country’s economy will grow just 1.5 percent, one of the slowest in Southeast Asia, according to Reuters. From 2022 to September, only 5 million foreign tourists will arrive.
Chinese may come to the rescue
After Singapore, Thailand could slip into recession, Chua said. However, the “wildcard” would be the timing of China’s reopening, which could determine whether Thailand’s economy has a “full recovery,” he added.
“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.
Inflation in Thailand, which hit a 14-year high of 7.66 percent in June, is another concern, according to financial market intelligence firm Refinitiv.
Indonesia, the Philippines are in a better position
In turn, Chua noted that Indonesia and the Philippines may be less affected by a potential U.S. recession due to their “domestic-oriented economies.”
“Indonesia and the Philippines are more immune to the slowdown in external demand and the recession in the US, both economies that continued to expand even during the 2008/09 global financial crisis,” he said.
