According to the chief economist of Asia at Morgan Stanley, demand for commodities on the continent has not grown as much as in many other places during and after the pandemic. Weak demand in advanced economies is expected to negatively impact Asian exports.
Compared to some developed countries or economic regions such as the US and Europe, inflation in Asia peaked earlier, according to Morgan Stanley’s Chief Asia Economist.
“Inflation has peaked when you look at the recently released data. More importantly, price pressures in this area will ease for the foreseeable future,” Chetan Ahya shared in CNBC’s “Squawk Box Asia” column.
“On average, inflation in Asia peaked at 5.5% and according to the latest statistics, inflation has fallen by about 0.5%. This figure is below the peak of inflation in the US of 9% and in Europe of 8.5-9%.”
A market in Thailand. Photo: Reuters.
Ahya shared that demand for commodities in Asia has not grown as strongly as in many other regions, while growth in most countries is still below pre-pandemic levels.
“The way I would describe the economic recovery in Asia is that most countries here are in the midst of a growth cycle. I think that’s a big reason to get inflation under control here quickly and central banks don’t need to be too drastic to tighten monetary policy.”
Last week, Bank of Thailand governor Sethaput Suthiwartnarueput said the agency did not necessarily have to “raise interest rates too aggressively” as the country’s economy is expected to quickly return to levels by the end of the year. from before the pandemic.
Concerned About Export Prospects
Like many countries, rising demand for commodities is one of the main reasons for inflation in many Asian countries, according to a group of experts from Morgan Stanley.
“For example, the demand for goods in the US increased during and after the pandemic in the US, causing supply and demand to become unbalanced. But the situation is gradually improving, the demand is decreasing,” emphasized Ahya.
With many supply chain bottlenecks easing and inventories increasing, Morgan Stanley predicts that demand for commodities will decline in the coming months. In addition, the labor market in Asia is not as hot as in the US, helping the region to better manage inflationary pressures, he added.
However, the decline in demand for commodities, especially in some advanced economies, will negatively impact Asia’s export prospects for the foreseeable future.
“Asia’s exports grew by about 10% a year ago. But this growth is slowing and we don’t think the prospects for the export of goods from this region will improve too much,” he said.
@ cafefu
