Southeast Asian economy at risk of double pressure

Not only are Southeast Asian economies deeply affected by US tariff policies under President Donald Trump, they may also be subject to both direct and indirect pressures.

Standard & Poor's (S&P) Ratings, the world's leading credit rating agency, has just released a new report on the impact of the US government's tariff policy on economies in the Asia-Pacific (APAC) region.

Indonesia's economy faces many difficulties ( In photo : Tanjung Priok Port in Jakarta, Indonesia)

Great risk

Accordingly, APAC region's exports will be impacted by tariffs in 2025.

First of all, businesses that have direct trade relations with the US market will be affected. Typically, Korean machinery and automation manufacturers, automobile manufacturers, machinery and semiconductor manufacturers. Similarly, Indonesian textile, garment, rubber, palm oil and tire manufacturers will also be directly affected. At the national level, the economies with a high proportion of exports to the US compared to GDP will be affected more. Notably, Thailand and Malaysia have export turnover to the US equivalent to 12.5% ​​of GDP and 12.2% of GDP of these countries, respectively.

Not stopping there, according to S&P Ratings, for most APAC economies, a bigger risk is the slowdown of the Chinese economy. Although the Chinese government has recently announced a series of economic stimulus programs, it may not be enough to fully address the challenges of US tax policy. As China's economic growth slows, its industrial and consumer sectors will decline. That will have a significant impact on Indonesia's mining and metals sector, and the steel and chemical industries of most APAC countries. If the entire region's economy stagnates, the performance of seaports, airports, as well as consumption and real estate markets will all be affected and stagnant across the region.

Stock market in trouble

Not only is APAC affected in general, according to the Financial Times , the stock markets of Southeast Asian countries are reeling as investors turn to China.

Indonesia and Thailand, the two largest economies in the region, are experiencing a significant outflow of foreign capital, and their stock markets are on a serious downward trend. Specifically, Indonesian stocks fell to a four-year low last week, and the country's rupiah also fell to a five-year low. The Financial Times even quoted expert Darren Tay, a unit of Fitch Solutions, as saying: "Investors are arguably more worried about Indonesia than they were at the beginning of the pandemic."

Similarly, Bank of America 's assessment said that Thailand's economic outlook remains challenging, with stagnant manufacturing, slowing tourism and subdued domestic demand.

In fact, the MSCI Indonesia index is down 16% year-to-date, while the MSCI Thailand index is down 12% over the same period. As a result, more than $1.3 billion in foreign capital has been withdrawn from the Indonesian stock market since the beginning of the year, while the figure for Thailand is $500 million. In contrast, foreign capital has increased by $13 billion in net inflows into the Chinese stock market overall since the beginning of the year. Hong Kong's Hang Seng index has increased by 20% over the same period.

The reason is believed to be because the risk of a trade war pushes down commodity prices and China, facing difficulties, exports more to the rest of the world. This causes Southeast Asian economies to be both directly affected by US tax policies and indirectly affected by the increased invasion of Chinese goods.

Gold price breaks record again

Last week, after surpassing the 3,000 USD/ounce mark on March 18, the world gold price continued to surpass the 3,500 USD/ounce mark when it reached 3,057 USD/ounce.

This development is believed to be a deeper concern among investors about the global economic situation, especially the US economy, making gold even more of a "safe haven". On March 19, US Federal Reserve (Fed) Chairman Jerome Powell said that President Trump's policies, notably the widespread tax hikes, may have slowed growth and increased inflation in the US economy. Meanwhile, President Trump criticized the Fed's decision to keep the policy interest rate unchanged. By the end of 2024, analysts expect the Fed to cut the policy interest rate by another 0.5 percentage points in the first quarter of this year.

Source: https://thanhnien.vn/kinh-te-dong-nam-a-truoc-nguy-co-ap-luc-kep-185250322215350602.htm