Singapore, Thailand Likely to Suffer the Most if U.S. Enters Recession, Economists Say

Economists warn Singapore and Thailand will be the first to be hit among the nations in Southeast Asia if the U.S. falls into a recession.
With the United States’ dominance on the global economy, it is difficult for many countries to avoid consequences if the U.S. enters a recession, and some Southeast Asian nations will be hit worse than others, economists told CNBC on Sunday.
According to Maybank senior economist Chua Hak Bin, Singapore is “more vulnerable” to a U.S. recession than its regional neighbors because of the country’s “very, very dependence.”
When asked which Southeast Asian economies would be struck first if the United States entered a recession, he answered, “I suspect [it] will be Singapore first.”, citing the country’s export dependency and its small and open economy, Chua said.
Following the Fed chairman’s speech at Jackson Hole last month, the Federal Reserve has remained hawkish stance on interest rate hikes, reiterating that its responsibility to return inflation to target is unconditional and signaling that there will almost certainly be some easing of labor conditions as well as some pain for households.
Thailand will also be one of the first to be impacted and could be next to fall into a recession after Singapore, according to Chua, as the country heavily relies on tourism for its economic growth. Thailand welcomed about 428,000 foreign visitors in 2021, or for only 1% of the tourist visitors seen prior to the pandemic.
In 2021, the country’s economy expanded 1.5%, one of the slowest in Southeast Asia.
The timing of China’s reopening, though, is a “wildcard” that could affect whether or not the Thai economy recovers “in full swing,” Chua said.
“As long as Chinese tourists are not returning, Thailand will continue to struggle. Growth has been weak, inflation is high, [and] the Thai baht is under pressure.”