Singapore is the most vulnerable and will be the first in Southeast Asia to fall if the US collapses, says Maybank’s Chua Hak Bin.
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SINGAPORE – Asia will not escape unscathed if the US collapses, but some Southeast Asian countries will be hit harder than others, economists warn.
The conflict between inflation and recession in the United States continues as the Federal Reserve sticks to its hawkish stance on interest rate hikes.
The US has already recorded two consecutive quarters of negative growth in the first two quarters of 2022 – what some consider a “technical” recession. However, there is little agreement on when a recession is likely to occur.
Economists told CNBC that Singapore and Thailand are likely to be the first to be hit if the US collapses.
Singapore
Singapore is “more vulnerable” to the US recession than its regional peers because it is “highly dependent,” said Chua Hak Bin, Maybank’s senior economist.
“I suspect it will be Singapore first,” he said when asked which Southeast Asian economy would be hit first if the US went down. This may interest you : Global Music Month: Celebrate This Perfect Playlist From Homeland. The island nation is likely to be the first because of its foreign dependence and its small and open economy, Chua said.
Selina Ling, chief economist at OCBC Bank agreed with that assessment.
“At first glance, I suspected that the open and trade-oriented Asian economies like [Singapore], Taiwan and South Korea, maybe Thailand are the usual suspects,” he said.
1. Interconnected
GDP growth in the country “has been more historically linked” to the US business cycle due to its export-dependent economy, Maybank said in a recent August report. This may interest you : U.S.-Thailand Statement on Strategic Alliance and Partnership – U.S. Department of State.
Singapore does not have a large domestic market and relies heavily on business services for economic growth, Chua explained. This includes shipping activities and cargo activities.
The country’s trade-to-GDP ratio for 2021 was 338%, according to the World Bank. The trade to GDP ratio is an indicator of how open an economy is to international trade.
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“Singapore’s dependence on foreign demand is very high,” Chua said. On the same subject : Age-Friendly and Dementia-Friendly Business Directory – Welcome to the City of Fort Worth. If the U.S. were to slip into recession, “confidence and baking” would affect foreign-oriented economies, he added.
Singapore is highly connected to the rest of the world and a “shock wave” in any country will have a ripple effect across the city, Irvin Seah, senior economist at DBS Group Research told CNBC.
However, he does not expect Singapore to fall this year or next year.
Maybank’s report said that if the US falls to the bottom, the recession “is likely to be shallow rather than deep.”
However, Chua said the US may be facing a “prolonged” recession and whether or not Singapore is headed for a prolonged recession will depend on China’s Covid-19 reopening. as China is the city’s biggest trading partner.
2. Export-driven economy
Singapore is a major exporter of machinery and electrical equipment, but output in its electronics sector fell 6.4% in July compared to a year earlier, data from the Economic Development Board showed. .
The result of the semiconductor sector fell by 4.1%, while other electronic modules and components decreased by 19.7% due to “low export orders from China and [South Korea],” in said EDB, a government agency under Singapore’s trade and industry department.
“China is the largest market of ASEAN countries… But exports to China have been bad,” Chua said, referring to the 10-member Association of Southeast Asian Nations. “Because Singapore is so dependent on exports, [it will] feel it.”
3. Tourism
Seah, the DBS economist, said he did not “discount the possibility” that Singapore would experience at least one quarter of negative growth quarter-on-quarter. However, economic conditions are normal for the country, he added.
“We are much stronger today than we were during the global financial crisis,” he said.
Thailand
Thailand will also be one of the first to be affected if the US collapses, predicted economists who spoke to CNBC.
1. Tourism
The country is highly dependent on tourism for its economic growth. Tourist income accounted for about 11% of Thailand’s GDP in 2019 before the outbreak. The country received about 40 million visitors that year and generated more than $60 billion according to World Bank data.
There were about 428,000 foreign tourist arrivals in 2021, and its economy grew by just 1.5% – one of the slowest in Southeast Asia, according to Reuters.
Thailand may be the next to collapse after Singapore, according to Chua. However, the “wild noise” will be the timing of China’s reopening – which could determine whether Thailand’s economy will come back “strongly,” he added.
Chinese tourists have not returned to the Southeast Asian country and that has left Thailand’s economy “in an even more precarious position,” said DBS Bank’s Seah.
“As long as Chinese tourists don’t come back, Thailand will continue to struggle. Growth has been weak, inflation is high, [and] the Thai baht is under pressure.”
The Thai baht is currently hovering around 36 baht per US dollar, down 20% compared to three years ago, before the epidemic.
2. Inflationary pressure
Thailand’s inflation rate hit a 14-year high of 7.66% in June, according to Refinitiv data.
The Bank of Thailand has raised interest rates only once since 2018.
“The headline inflation is very high in Thailand, but the basic price is not very high, in correlation it is not very high. It is true that the growth has been very weak, so they do not feel the urgency to tighten aggressively, said Chua of Maybank. .
He pointed out that Indonesia and the Philippines may not be affected by a possible US recession because of their “domestic economies.”
A Maybank report said: “Indonesia and the Philippines are largely protected from the slowdown in external demand and the US recession, with both economies continuing to grow even in 2008/09 during the global financial crisis.” yes.”
According to data from the World Bank, GDP growth in Indonesia and the Philippines was higher compared to Singapore and Thailand during the global financial crisis in 2008 to 2009.
— CNBC’s Abigail Ng and Weizhen Tan contributed to this report.
Both countries are very safe for tourists. You are unlikely to find any kind of violent crime in Thailand or Malaysia. Although statistics show that Malaysia is slightly safer than Thailand. The biggest threat to tourists is probably road safety.
What is the richest country in Southeast Asia?
| Status | Country | 2020 GDP (PPP) billions of USD |
|---|---|---|
| 1 | Indonesia | $3,328 |
| 2 | Thailand | $1,261 |
| 3 | Vietnam | $1,047 |
| 4 | Malaysia | $988 |
What is the richest country in Asia 2020? Based on GDP per capita, Qatar is the richest country in Asia and the world. This country is located in the Middle East of the Arabian Peninsula and its capital is Doha.
Which country is the richest in Southeast Asia 2021?
The city of Singapore is the richest country in Asia, with a GDP per capita of $107,690 (PPP Int$).
What is the weakest country in Southeast Asia?
2021 GFP ranked landlocked Laos as having the weakest armed forces in Southeast Asia (118th globally).
Who has the strongest military in Southeast Asia? Indonesia. Throughout Southeast Asia, Indonesia has the strongest military in terms of units and personnel. It does not have compulsory military service, and the nation does not have to impose this law because it already has 400,000 active soldiers and is not under war. Indonesia has no conscription.
Which is the strongest army in Asia?
By 2022, China had an estimated military strength of 2 million, followed by India with an estimated strength of 1.45 million.
Which country has strongest economy in Asia?
China is the largest economy in Asia, followed by Japan, India, South Korea and Indonesia. These five together hold a whopping 76.5% of Asia’s economy. Timor-Leste is the smallest economy in Asia. Six Asian economies would have a GDP above $1 trillion, and 23 would have an economy above $100 billion.
What are the top 5 economies in Asia right now? Asia’s 5 Biggest Economies – Go East!
- China. Shanghai, China is one of the fastest growing cities in the world. …
- Japan. No wonder Tokyo is such a bustling city, Japan’s fourth largest economy in the world! …
- India. …
- South Korea. …
- Singapore.
Which country has the best economy in Asia 2020?
The 10 richest countries in Asia (2020 GDP per capita, Int$ PPP – IMF) The city of Singapore is the richest country in Asia, with a GDP per capita of $107,690 (PPP Int $). Singapore owes its wealth not to oil but rather to government corruption and a pro-business economy.
