JakartaGlobe-May 17
Indonesia and some of its Southeast Asian peers are better positioned to stave off high inflation and slowing growth, or stagflation, thanks to windfall profit from high commodity prices and huge domestic demand, global investment bank Morgan Stanley said in a recent research report. The investment bank said the world’s steady economic recovery today was under threat. Demand and supply-side shocks stemming from the war between Russia and Ukraine and China’s Covid-zero approach increase inflation risks and threaten to slow down growth. In addition, the Federal Reserve had taken a hawkish stance by increasing the interest rate and initiating quantitative tightening, shifting the global expansion gear down by a notch. That raises the question of whether economies in Southeast Asia could maintain their steady recovery. For Morgan Stanley, some of them could. “Economies with a stagflation hedge and domestic demand buffer are better positioned: ASEAN looks better placed vs. North Asia. In ASEAN, Indonesia, Malaysia and the Philippines are better placed,” Morgan Stanley wrote in the report. In terms of growth, rising commodity prices would lend a tailwind to commodity exporters like Indonesia and Malaysia at the expense of major importers like South Korea, Taiwan, and Singapore. “For net commodity exporters … the positive terms of trade provide additional liquidity to fund domestic demand (whether through fiscal resources or credit growth). This is particularly so for economies like Indonesia, which tend to be liquidity-constrained,” Morgan Stanley said. Read more at: https://jakartaglobe.id/business/indonesia-asean-peers-are-better-placed-against-stagflation-morgan-stanley
