Recession in the U.S. likely to hurt Singapore and Thailand

Many economists have warned that Asia is likely to be hit by a recession in the U.S. However, some countries in Southeast Asia will be hit harder than others, including Singapore and Thailand.

The U.S. continues to struggle with inflation and is technically in a recession. At the same time, the U.S. Federal Reserve (Fed) is sticking to its stance of raising interest rates faster in order to contain inflation.

U.S. gross domestic product (GDP) contracted for the second quarter in a row, meaning that the U.S. is in a technical recession.

Economists say Singapore and Thailand are likely to be the first two countries to be affected by a U.S. recession.

A Maybank report from late August said that GDP growth in each country is related to the U.S. business cycle because these countries are dependent on exports.

Thailand is said to be one of the first countries to be affected by the U.S. recession, according to economic experts, as Thailand is heavily dependent on the tourism sector.

According to the World Bank, the tourism industry accounted for about 11% of GDP in 2019 before Covid-19. At that time, Thailand welcomed nearly 40 million foreign tourists and generated over $60 billion in revenue.

In 2021, however, Thailand welcomed only 428,000 foreign tourists, while its economy grew by only 1.5%, one of the slowest in Southeast Asia.

Thailand could go into recession after Singapore, but will have to wait for China to reopen the country to see if the Thai economy can fully recover or not.

DBS Bank stated that Chinese tourists do not visit Thailand because the country is closed. These factors put the Thai economy in an even more precarious position.

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