If the United States enters a recession, Asia will not be spared, but some Southeast Asian countries may be hurt more than others, economists warn. The war between inflation and recession continues in the United States as the Federal Reserve maintains its aggressive position on interest rate hikes.
The United States has already seen two straight quarters of negative growth in the first two quarters of 2022, which some refer to as a technical” recession. Still, there is little agreement on when a full-fledged recession will occur. Due to its reliance, Singapore is “more exposed” to a U.S. recession than its regional peers.
Because of its export-oriented economy, GDP growth in the country has been “historically more connected” with U.S. business cycles. Singapore’s small domestic market relies primarily on trade services to drive economic growth.
According to the World Bank, the country’s trade-to-GDP ratio for 2021 is 337%. The trade-to-GDP ratio measures an economy’s openness to foreign trade. Singapore is intimately connected to the rest of the world, and any “shock wave” in any country will undoubtedly have repercussions throughout the city. Singapore is a major exporter of electrical gear and equipment, although output in the electronics sector declined 6.4% in July.
Output in the semiconductor sector fell 4.2%, while output in other electronic modules and components fell 19.8% due to reduced export orders from China and South Korea.
Since the epidemic, China’s zero-Covid policy has further hampered Singapore’s tourism rebound.
According to figures from Singapore’s tourist agency, 3.5 million Chinese residents visited Singapore in 2019, accounting for 13.5% of total visitors. However, only 88,000 people visited between January and December of last year.
Thailand will be among the first to suffer if the United States enters a recession. Chinese visitors have not returned to Thailand, leaving the country’s economy even more difficult.