Will Asean be able to handle a US recession on top of surging inflation?
If the US were to enter a recession, export-reliant Singapore and Malaysia would be among the worst hit, while remittances to the Philippines may decline, analysts say.
As countries in Southeast Asia began gradually lifting strict curbs on movement and business activity from last year, central banks in the region were expected to start down the path of normalising their key policy rates to keep in line with anticipated rate hikes by the US Federal Reserve.
Most central banks around the world would adjust their key policy rates in tandem with Fed decisions, to manage volatility in their currencies against the US dollar – which typically strengthens when the Fed raises rates – and imported inflation caused by the weakening value of their currencies.
But the best laid plans by financial policymakers ended up being waylaid by Russia’s unexpected invasion of Ukraine in February, which caused inflation to accelerate beyond what many analysts and central banks were prepared to deal with.