Uncertainty over the Chinese economy and expectations of further interest rate hikes by the US Federal Reserve have prompted economists to revise downwards their 2023 forecasts for the five largest South East Asian economies.
Indonesia, Malaysia, Singapore, Thailand and the Philippines are all closely dependent upon China’s overall economic well-being. The entire South East Asian region remains focused on the timing of China’s reopening from its zero-COVID policy; it is expected that one of the main topics at the National Congress of the Chinese Communist Party, opening on October 16, will be the relaxing or lifting of this aggressive zero-COVID approach. The region depends heavily on tourism but also on China as the main consumer for its exports.
Another leading trading partner for the region is the EU, to where ASEAN countries exported goods worth around Euro 136 billion in 2021. A sustained EU economic slowdown would further dampen growth expectations for the largest South East Asian economies.
The strength of the US dollar, as well as base metals’ continued search for direction, has made scrap trading within the region challenging. Tighter cash reserves, along with continued congestion at the region’s main container ports, are expected to hamper trading volumes in the short term.