Supply chain reconfigurations gaining steam

Supply chain reconfigurations gaining steam

  • Evidence is mounting that firms are doubling down on plans to shift production out of China. Geopolitical risks and shifting consumer dynamics will strengthen this trend.
  • Economic efficiency is being de-prioritized as firms seek to bolster resilience and security. Reshoring and near-shoring are the new modus operandi.
  • In addition to the manufacturing segment, the services sector is also seeing major supply chain adjustments as cost pressures in advanced markets spur offshoring efforts.
  • China’s large scale, however, means that no single economy will be the new centre of global production. Firms will make different locational choices based on their own needs.

Post-election uncertainty looms following thai polls

  • The reformist Move Forward Party has outperformed prior expectations and emerged as the largest party in parliament, while Pheu Thai was relegated to a close second place.
  • Parties aligned with the military-royalist establishment were the target of voter ire, as the electorate sought new political options that promised changes to the status quo.
  • Despite its victory, an MFP-led government is unlikely to be tolerated by establishment forces. The humbled Pheu Thai remains in a position to lead a grand coalition government.

Regional updates

  • Malaysia’s 1Q23 GDP grew respectably, bolstered by resilience in domestic spending. Despite continued normalization, the economy remains on sound footing.
  • State elections in the Indian state of Karnataka delivered a setback to Modi’s BJP. Congress’ victory affirms its position as the primary nationwide opponent to the BJP.
  • China saw a large slowdown in credit growth, the latest in a series of signs that the economy is running out of momentum. Anaemic price and trade growth offer no relief.
  • Hong Kong’s 1Q23 GDP broke a year of consecutive contractions and provides a good start to its post-pandemic reopening. External headwinds, however, are a concern.
  • Indonesia saw massive trade contractions that go beyond softening commodities markets.
  • The Philippine economy saw slower but still robust domestic-driven growth in 1Q23.

Read more: CAA-weekly-15-may-2023.pdf