CARI Captures Issue 659: Myanmar’s economy to expand by 1% for the year through March 2025

MYANMAR
Myanmar’s economy to expand by 1% for the year through March 2025
(12 June 2024) Myanmar’s economy faces a deepening crisis due to ongoing conflict and compulsory conscription, as reported by the World Bank. The GDP growth forecast has been reduced to 1% for the year through March 2025, down from 2% projected in December 2023. The slower growth is attributed to high inflation, labour shortages, foreign exchange constraints, and electricity issues. The country’s GDP also grew 1% in the past year. Conscription announced for February 2024 has led to increased migration and labour shortages. Trade disruptions have significantly affected imports and exports, with a 13% drop in exports and a 20% drop in imports over six months. Power outages are a growing problem, with 33% of companies citing them as their main issue. Inflation remains high, with consumer prices rising 30.4% last September. The poverty rate is expected to reach 32.1% for 2023-24, reflecting deteriorated economic conditions.

THAILAND
Thailand’s central bank maintains key interest rate at 2.5%
(12 June 2024) Thailand’s central bank maintained its key interest rate at 2.5%, as decided by a 6 to 1 vote in the latest monetary policy committee meeting. The decision aligns with the bank’s inflation target range of 1% to 3%, as the headline consumer price index rose by 1.54% in May. This marks the fourth consecutive meeting without a rate change. The bank’s forecast predicts 2.6% economic growth in 2024, driven by domestic demand, tourism recovery, and increased government spending, despite slow export growth. Economists anticipate potential rate cuts in the final quarter of the year, following the U.S. Federal Reserve’s expected rate adjustments. The central bank projects 3.0% economic growth and 1.3% inflation for 2025.

MALAYSIA
ASEAN must enhance rail connectivity to facilitate free flow of goods
(11 June 2024) Malaysia’s Transport Minister emphasised the need for ASEAN member states to enhance rail connectivity to facilitate the free flow of goods in the region. Loke highlighted the long-term vision of linking peninsular Malaysia’s railway network to Thailand, Laos, and China. He noted that despite existing connections, gaps remain in the Kunming-Singapore railway network. Addressing these gaps requires harmonised regulations and cross-border customs clearance. Malaysia is conducting a preliminary feasibility study on the Trans-Borneo Railway project, expected to be completed in nine months, to assess its commercial, technical, and logistical viability.

CHINA, ASEAN
Chinese solar panel producers cease some production in Southeast Asia due to after US tariff holiday expires
(07 June 2024) LONGi Green Energy Technology Co Ltd and Trina Solar Co, Ltd, two major solar panel producers, are suspending some production in Southeast Asia following the expiration of a US tariff reprieve on solar panels from specific Southeast Asian countries. LONGi suspended production at a battery plant in Viet Nam, which accounts for less than 10% of its total battery production capacity. Trina Solar announced maintenance shutdowns for its facilities in Thailand and Viet Nam, primarily serving the US market. LONGi’s other plants in Malaysia and Viet Nam remain operational. The tariffs aimed to prevent companies from bypassing US duties on Chinese goods by completing panels in Southeast Asia. Trina Solar is constructing new cell and module capacity in Indonesia, with operations expected to begin in the third quarter, in partnership with Indonesian state-owned utility PT PLN (Persero).

INDONESIA
Government designates Tanjung Sauh island as special economic zone
(13 June 2024) Indonesia has designated Tanjung Sauh island as a special economic zone to foster job creation and economic development. The zone spans 840.67 hectares and will house electronic component industries, electronic product assemblies, and a centre for alternative energy research and production. It will be supported by a port with a capacity of 5 million TEUs, enhancing logistical connections between Batam and Bintan trade centres and international markets. The zone has secured investment commitments of 199.6 trillion rupiah (approximately US$12 billion) and is projected to generate 366,087 jobs by 2053.

INDONESIA
President-elect Prabowo Subianto to increase debt-to-GDP ratio towards 50% over next five years
(14 June 2024) Indonesia’s President-elect Prabowo Subianto plans to increase the debt-to-GDP ratio by 2 percentage points annually over the next five years, reaching approximately 50% by the end of his term, up from about 39% currently. This gradual increase aims to allow the economic team to adapt to any headwinds. This marks a significant shift for Indonesia, which has maintained a conservative fiscal policy post-1997 Asian Financial Crisis, except during the COVID-19 pandemic. The proposed increase is intended to reassure investors while maintaining fiscal prudence, keeping the ratio below 60%. Prabowo’s spending plans, including free lunches for children, are projected to cost up to 460 trillion rupiah (US$28 billion) annually. The high interest-rate environment and currency volatility pose challenges to borrowing. Indonesia’s current government spends 500 trillion rupiah annually on interest payments, consuming 15% of the budget.

SINGAPORE
Prime Minister Lawrence Wong visits Brunei Darussalam and Malaysia from 11-12 June
(10 June 2024) Prime Minister Lawrence Wong will visit Brunei Darussalam and Malaysia from 11-12 June, as announced by the Prime Minister’s Office on Monday. This marks Wong’s first overseas trip since taking office last month. In Brunei, he will have a royal audience with Sultan Hassanal Bolkiah and Queen Saleha and attend an official lunch hosted by the Sultan. Accompanying Wong will be his wife Loo Tze Lui, Foreign Affairs Minister Vivian Balakrishnan, Minister for Sustainability and the Environment Grace Fu, National Development Minister Desmond Lee, and Minister of State Rahayu Mahzam. On Tuesday evening, Wong will travel to Malaysia to meet Prime Minister Anwar Ibrahim and other Malaysian leaders. During his absence, Deputy Prime Minister Gan Kim Yong will serve as Acting Prime Minister.

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NEW ZEALAND, ASEAN
New Zealand enhancing cooperation with ASEAN on regional stability and climate change
(11 June 2024) New Zealand is enhancing cooperation with ASEAN to promote regional stability and address challenges such as climate change, as stated by Deputy Prime Minister Winston Peters. Peters emphasised the importance of robust relations with ASEAN for New Zealand’s active regional participation. He suggested closer collaboration in developing green energy and hydrogen, and sharing agricultural expertise. Peters highlighted the significance of multilateral frameworks for smaller countries, advocating for collective action to defend rights and uphold values of freedom, democracy, and the rule of law. Trade between ASEAN and New Zealand reached US$14.92 billion in 2022, with next year marking their 50th anniversary of dialogue relations.

JAPAN
Japan’s economy expands by 0.6% in April 2024, driven by recovery in auto manufacturing
(12 June 2024) Japan’s economy grew by an annualised 0.6% in April 2024, driven by a recovery in automobile shipments, according to the Japan Center for Economic Research (JCER). This followed a 0.3% GDP growth in March. Private final consumption increased by 0.5% and private residential investment by 1.3%, reversing declines of 0.9% and 2.3% in March, respectively. Exports rose by 0.4% in April, while imports fell by 0.8%, further boosting GDP growth. JCER noted that the increase in automobile-related exports contributed significantly to this improvement. However, JCER expressed caution regarding private consumption, citing weak underlying trends based on credit card usage and consumer confidence data. Private-sector capital investment declined by 0.2% from March.

SOUTH KOREA
South Korea to extend ban on short-selling of stocks until 30 March, 2025
(13 June 2024) South Korea will extend its ban on short-selling stocks until 30 arch, 2025, to develop an electronic system to prevent illicit trading practices, particularly naked short-selling. The Financial Services Commission (FSC) announced this extension after the stock market closed on Thursday. The FSC plans to establish an electronic monitoring platform by March 2025, initially introduced in April to detect naked short sales. The FSC will also revise short-selling rules to balance opportunities between retail and institutional investors and increase fines for illegal trading practices. The ban, originally set to expire on 30 June, was requested to be extended by the ruling People Power party until the new system is operational. Short-selling has been banned since November 2023 due to concerns from retail investors about price declines and illegal trading. The extension has raised concerns among market analysts about its impact on market dynamics and South Korea’s potential inclusion in MSCI’s developed market index. Last week, MSCI downgraded South Korea’s short-selling accessibility in its annual review.

 

15 participating countries	20 chapters	2.2 billion	US$26.2 trillion	28%
ASEAN member states, Australia, China, Japan, South Korea, New Zealand	trade in goods and services, investment, intellectual property, e-commerce, competition, SMEs, economic and technical cooperation, and government procurement	combined population, 30% world’s population	combined GDP, 30% global GDP	global trade (based on 2019 figures)