The economy picked up in Q3 2022, as mobility, tourist inflows, and employment improved, in line with a projected strengthening domestic recovery in H2. However, goods exports softened due to weakened global demand. Inflation remained the highest among the major ASEAN economies, driven by supply-side factors, while demand-pull pressure remained muted.
The private consumption index expanded in July as domestic mobility and tourism sector continued to improve and a strong labor market also supported private consumption. The unemployment rate fell to 1.4% in Q2, down from the COVID crisis peak of 2.0%, but above the 1.0% seen pre-pandemic.
Inflation rose to 7.9% (yoy) in August, due to rising prices of food-related categories. Food prices rose following domestic flooding and food shortages. Rising meat prices reflected the high prices of animal feed. Although energy prices moderated following the fall in the global crude oil price, natural gas prices continued to climb, and rising subsidy costs have pressured the government to raise regulated prices.
Tourist arrivals in July increased by 46% (mom) to 1.12 million, reaching 34% of the same period of 2019. This pattern reflects a trend observed in major ASEAN countries. Asian tourists, especially from ASEAN nations, continued to rise substantially as border restrictions were relaxed, accounting for 67% of total tourists in July. Arrivals are projected to continue to surge in the second half of 2022.
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Source: World Bank