Religious tensions in Southeast Asia; Thailand has a new monarch – CAA Weekly

Key highlights from the CAA Weekly Table

• Global: Tradeable price deflation is easing while PMIs are rising with positives to Asian exports. The OPEC agreement, if sustained, will stabilise oil prices – another reason for the end of global deflation. The US economy continues to be resurgent but the conduct of President-elect Trump will upset the equilibrium; a clear risk of a US-China clash looms.
• Asian economies: India’s de-monetisation move will chill economic growth even though 3Q16 GDP growth has held up well. The political troubles in South Korea will weigh on economic prospects; already, exports continue to decline while economic growth decelerates. The deterioration of the labour market in Singapore reflects the more challenging economic reality; on the brighter side, bank lending rose, driven by rising consumer loans while the decline of business loans narrowed further.

Religious tensions in Southeast Asia

• Nations across Southeast Asia continue to face the challenge of combating the growing capacity of extremist militants.
• Strengthened cross border links between Indonesia, Malaysia and the Philippines have made the Sulu Sea Triangle an important network linking fugitives within the region and a key mode through which the Islamic State (IS) has expanded its influence.
• While Thailand remains void of IS links, rising violence by Muslim separatists in the South increases its susceptibility to IS influence and could become an incubator for terrorism.

Thailand: New king, old fears

• Thailand’s economy has been steadily gaining steam with private consumption and exports the main growth drivers. In line with the brighter export outlook, the production scene in export-oriented Thailand has also improved steadily. However, private investment continues to be lacklustre as political concerns linger.
• Rama X of the Chakri dynasty, King Maha Vajiralongkorn, has ascended the throne, ending seven weeks of interregnum. While the royal succession appears to have proceeded smoothly, there is uncertainty over whether the new king can match the extraordinary achievements of his father. Even as power dynamics begin to shift, King Vajiralongkorn has signalled that he will not move hastily by re-appointing long-serving and highly respect General Prem Tinsulanonda to head the Privy Council.
• The Thai economy is healing well and should continue to garner traction as major economies recover and boosts Thailand’s exports. However, a fundamental resolution of politics in Thai society is sorely required.

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