CARI Captures Issue 604: Renewable energy growth in Thailand, 2009 – 2022 (GW)
Global energy crisis prompts Thailand to accelerate shift towards renewables
(04 May 2023) The global energy crisis sparked by the Russian invasion of Ukraine has prompted Thailand to accelerate its shift towards renewables, making it the latest country to embrace solar and wind power in order to reduce reliance on imported fuel and make Thailand more energy independent. In April 2023, the Thai government announced winners for a roughly 5-gigawatt renewables power purchase plan – Thailand’s biggest so-called feed-in tariff program – that is set to double its wind and solar capacity by 2030. Authorities are now also planning another round for 3.67 gigawatts later in 2023. The government’s next power development plan, which is expected to be unveiled and proposed later in 2023, is expected to see renewables account for more than 50% of the power generation mix by 2037, up from about 20% in the current plan. Thailand currently depends on LNG imports for its power generation.
GDP expands 5.03% year-on-year in first quarter of 2023 on back of resilient domestic consumption
(05 May 2023) Indonesia’s economy expanded by 5.03% in the first quarter of 2023 on the back of strong domestic consumption. On a quarter-by-quarter basis, Indonesia’s economy contracted by 0.92% in the first quarter. Private consumption grew 4.54% year-on-year in the first quarter, accelerating slightly from 4.48% recorded in the last quarter of 2022. Private consumption remains the largest contributor to Indonesia’s economic output, though its share has fallen to about half of GDP from close to 60% in 2020. Meanwhile, exports expanded 11.68% in the first quarter, a drop from the near-15% growth recorded in the last quarter. This is attributed to lower prices for commodities such as coal, palm oil, crude oil and nickel as the global commodity boom recedes. Bank Indonesia looks set to return to Bank Indonesia’s 2% to 4% target range sooner than expected.
Rare earth mine production jumps from 400 tonnes in 2021 to 4,300 tonnes in 2022
(05 May 2023) According to the United States Geological Survey, Viet Nam’s rare earth mine production jumped from 400 tonnes in 2021 to 4,300 tonnes in 2022, a tenfold increase. This is attributed to global mining firms flocking to Viet Nam due to the country having the world’s second largest estimated deposits of rare earths in order to reduce reliance on China. Rare earths are used in electronics manufacturing and batteries, making them important for the global transition towards cleaner sources of energy and in defence. Viet Nam’s estimated reserves of 22 million tonnes are half of China’s and larger than any other country. Its output growth in 2022 turned Viet Nam into the world’s sixth biggest producer, up from 10th in 2021. The majority of Viet Nam’s rare earth exports were shipped to China, with Chinese customs data showing a doubling of imports from Viet Nam of rare earth elements (REEs) and other concentrates that usually contain the strategic metals to nearly 12,000 tonnes in 2022.
Viet Nam’s manufacturing PMI extends contraction in April 2023 amidst weak global demand
(04 April 2023) Viet Nam’s manufacturing Purchasing Managers’ Index (PMI) extended its contraction in April 2023 as companies struggled to find new orders amid weak global demand. The S&P Global Vietnam manufacturing PMI dropped to 46.7 in April from March’s reading of 47.7, well below the 50.0 threshold that separates growth from contraction. Factory output and new orders decreased for the second month in a row and at faster paces than in March. The decline in both manufacturing output and new orders would lead to falls in input purchasing activity and staffing levels. Raw material prices also rose at the softest pace in almost three years, causing manufacturers to start lowering their prices in an attempt to stimulate demand.
Malaysia’s central bank unexpectedly raises overnight policy rate by 25 basis points
(03 May 2023) Malaysia’s central bank unexpectedly raised its overnight policy rate by 25 basis points to 3%. Bank Negara Malaysia (BNM) had kept rates unchanged at its two previous meetings this year, as it sought to assess its previous four consecutive hikes totaling 100 basis points made in 2022. While Malaysia’s economy grew by 8.7% in 2022, its future outlook remains clouded due to slowing global demand. BNM stated that the latest developments suggest further expansion in economic activity in the first quarter of 2023, driven by strong domestic demand, household expenditure, and better labor market conditions. BNM maintained its headline inflation forecast of between 2.8% to 3.8% in 2023. In 2022, inflation was measured at 3.3%. Consumer prices rose by 3.4% year-on-year in March 2023, its slowest pace in nine months.
Government plans to roll out second 5G network in 2024 to end state monopoly
(03 May 2023) Malaysia’s government plans to roll out a second 5G network in 2024 in order to end the state monopoly. At present, the state-owned Digital Nasional Berhad (DNB) has a monopoly as Malaysia’s sole 5G network operator. Once coverage of this network reaches 80% of Malaysia’s populated areas, a goal expected to be reached in 2023, a second entity will operate another 5G network in parallel. Bidding for contracts to build the second network will be awarded through an open tender process. At present, DNB reached 57.8% of the 5G rollout in the country, with roughly 2,000 5G transmitters to be built to reach the targeted 80%. Government officials stated having dual networks would increase capacity and also reduce the risk of disruption from a failure in any single bnm network. Current Prime Minister Anwar Ibrahim had previously ordered a review of the US$2.47 billion contract awarded to Ericsson in an open tender process under the previous government.
Domestic travel demand recovering following COVID-19 and 2021 coup
(04 May 2023) Domestic travel demand is on a recovery from the COVID-19 pandemic as well as domestic strife in relation to the military coup in February 2021. With many foreign tourists avoiding the country, local hotel operators have started to focus on domestic tourists instead. During the long holiday period celebrating the country’s New Year water festival, known locally as Thingyan, travel demand grew to a higher level than each of the previous three years. According to real estate consultancy CIM Property Consultants, the average room occupancy rate at large hotels in Yangon stood at 32% in 2022, still below the 56% rate recorded in 2019. CIM projects the occupancy rate to exceed 40% by end-2023 should the situation in the country stabilize and appropriate reforms are carried out.
Reserve Bank of Australia unexpectedly raises interest rates by quarter-percentage point on 02 May, 2023
(02 May 2023) On 02 May, 2023, the Reserve Bank of Australia (RBA) unexpectedly raised interest rates by a quarter-percentage point. The RBA increased its cash rate to 3.85%, the highest level since April 2012, after having paused in April 2023. The Governor of the RBA highlighted that services and energy price inflation remained high and was likely to remain so for the time being. The RBA had begun hiking aggressively from May 2022, before pivoting earlier than other global counterparts to smaller hikes. Australia is still seen as lagging behind its global counterparts in its policy response to inflationary pressures. It has raised rates by 3.75 percentage points, compared with 5.0 in New Zealand and 4.75 in the US. The RBA has projected inflation easing to 4.5% in 2023 from 7% in the first quarter, while GDP is seen advancing 1.25% this year.
Inflation slows for third straight month in April 2023, suggesting price pressures are easing
(02 May 2023) South Korea’s inflation slowed for the third straight month in April 2023, providing more evidence for its central bank that price pressures are easing and potentially creating room for a pivot towards interest rate cuts to support economic growth. Consumer prices rose 3.7% year-on-year in April, matching the slowest pace of growth since January 2022. Core inflation, which excludes more volatile oil and agricultural prices, cooled to 4.6% year-on-year compared with 4.8% year-on-year in March 2023. South Korea’s central bank held rates steady for a second straight meeting in April, noting risks to the economy including slower global demand. In April 2023, the central bank stated that headline inflation will likely be in line with its February 2023 projection of 3.5% in 2023, while core inflation may be slightly above its previous forecasts.
Hong Kong emerges from recession with 2.7% growth year-on-year in Q12023
(02 May 2023) Hong Kong emerged from recession in the first quarter of 2023 with 2.7% growth year-on-year. This was the first quarterly gain in GDP in more than a year, and a rebound from the 4.1% decline in the final quarter of 2022. This rebound was attributed to a reopening of its borders after years of COVID-19-related restrictions. Retail sales by value rose to a three-year high in January 2023 as authorities dismantled border controls between Hong Kong and mainland China. Visitor arrivals surged to some 2.5 million in March 2023, up 68% from February, with that figure expected to grow further in May as a projected hundreds of thousands of mainland Chinese tourists visit the territory during the five-day Labor Day holiday. Inbound tourism and domestic demand will remain the major drivers of Hong Kong’s economy in 2023.