South East Asia
During the first half of 2022, South East Asian countries successfully steered their economies away from the pandemic to resume more normal business activities. Borders opened and travel increased for both business and pleasure. The tourism industry is a key driver of the regional economy and accounts for upwards of 20% of GDP. Many economists remained optimistic about recovery within the region and its ability to maintain an upward trajectory for the remainder of the year.
This optimism has been dampened recently. Economists have revised their forecasts downwards for the second half of 2022 owing to concerns of slowing ASEAN economies. As well as ongoing inflation, the major reason for the downgrade lies in the US Federal Reserve's benchmark interest rate hike of 75 basis points on June 15 - the largest jump since November 1994.
Always a great economic indicator, the terminal metal markets recorded their worst quarter since the 2008 financial crisis as prices have been pummelled by recessionary worries. Base metal consumers in the region have shown their resilience during this steep decline in prices and have continued their steady buying, albeit at considerably lower price levels and volumes. Tempered volumes are attributed to the continued congestion at the region’s main container ports and the tightening of cash reserves. Most in demand remain copper-bearing grades such as shredded mixed non-ferrous heavies (Zebra) and shredder pickings (Shelmo).
One positive sign of global confidence in the region is the recent announcement from shipping giant Mediterranean Shipping Company S.A. (MSC) that it will add a new weekly service to South East Asia, offering customers a direct link from north China and Korea and providing improved transit times. This brings the number of MSC’s weekly services to the region to 36.