Source: Vientiane Times
The inflation forecast for Southeast Asia for 2022 has been raised significantly from 3.7 percent to 4.7 percent, according to the latest report from the Asian Development Bank.
Laos has one of the highest inflation rates in the region, with the price rise recorded 23.6 percent year-on-year in June, according to ADB’s “Asian Development Outlook (ADO) 2022 Supplement”.
Meanwhile the inflation rate reported in other Asean nations for the same month included Thailand (7.7 percent), Vietnam (3.4 percent), Philippines (6.1 percent) and Indonesia (4.3 percent).
The ADB also revised up inflation next year from 3.1 percent to 3.4 percent.
The higher rates for both years are due to rising energy and food prices, and supply chain disruptions. The inflation forecast for Indonesia for 2022 is raised from 3.6 percent to 4 percent.
In the meantime, inflation forecasts for Thailand are revised up from 3.3 percent to 6.3 percent for 2022 and from 2.2 percent to 2.7 percent for 2023.
The raised inflation forecast linked rising energy prices and higher cost pass-throughs, which are expected to affect prices for a wider range of products.
In Laos, the consumer price index jumped sharply above expectations and the ceiling rate of 12 percent set by the government.
The soaring price of fuel, gas and other imported goods, compounded with the depreciation of the kip, are among the main factors driving inflation, according to the latest report from the Lao Statistics Bureau.
At the government’s recent open meeting, cabinet members and provincial governors agreed to stabilise currency exchange rates, ensure a sufficient supply of fuel, and regulate the price of products on sale at markets.
Nevertheless, Southeast Asia’s economies still face the challenges of higher oil prices, the end of low global interest rates, and continuing trade and supply disruptions, according to the ADB.
These factors have lowered the outlook for some economies in 2022 and 2023. In addition, smaller economies in particular are being more heavily affected by supply disruptions and inflation from higher oil prices.
Tourist arrivals are picking up in Southeast Asian nations including Laos.
However, economies in the region with high vaccination rates have yet to see meaningful tourism revivals, according to the ADB. Against this backdrop, the economic growth forecast for Southeast Asia is revised up slightly to 5 percent in 2022 from ADO 2022’s projection of 4.9 percent. The forecast for 2023 is maintained at 5.2 percent.
In the smaller economies, rising fuel prices and a significant currency drop against the US dollar are building up pressure on inflation, particularly in Laos and Myanmar. Headline inflation is at double digit levels in most of the Caucasus and Central Asia, in Mongolia, Pakistan, Sri Lanka, Laos and Myanmar.