SOUTH-EAST Asia is more vulnerable to an economic downturn than it was during the global financial crisis one decade ago, according to analysts at global management consultancy Bain & Co.
The commodities sector will not be as able to cushion the economic blow, as prices and sales are both down, while corporate and household debt have blown past 2008 and 2009 levels to reach the private-sector leverage of more developed markets such as the United States."The region's strong economic growth does not, in fact, shelter it from harm should other parts of the world sink into a downturn or even a recession," said the report.
Regional exposure to the Chinese economy has been reflected in a five percentage point increase in China's share of Asean exports between 2006 and 2018, the report noted. "An ongoing US-China trade war might further slow China's growth, which would pose a problem for the region in the short term," the report also warned.
The report also cautioned that the timing of the next downturn"is, of course, unknowable" - an uncertainty that Mr Olsen characterised as the biggest challenge for policymakers and firms alike, as excessively conservative preparation could also curtail growth opportunities.
EMs vs US have been underperforming for the past 5 years and Bain comes out now to tell everyone it's bad here? Tell us something we dont know lol finance singapore bain BainAlerts
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