A recent economic analysis by Qatar National Bank (QNB) reveals that major ASEAN economies exhibit robust resilience to abrupt shifts in risk sentiment and capital flows. The focus was on Indonesia, Thailand, Malaysia, and the Philippines, examining their external vulnerabilities through their financing needs and foreign exchange (FX) reserves.
Countries with significant external financing requirements need to either attract foreign capital or utilize their FX reserves. Thailand, despite facing challenges such as reduced international tourism, maintains a stable position. The country benefits from substantial current account surpluses, leading to $221 billion in FX reserves, covering 209% of the IMF reserve adequacy metric.
Malaysia is also highlighted for its resilience. As a major exporter of manufactured goods and commodities, Malaysia has consistently run current account surpluses. This has been bolstered by strong commodity markets, resulting in significant surpluses. The central bank holds $113 billion in FX reserves, covering 115% of the IMF’s metric, although this is tighter compared to Thailand’s reserves.
The Philippines, however, faces a different scenario as a net external borrower, running current account deficits. Despite a large trade deficit, remittances from overseas workers partially offset this. The country is projected to maintain a current account deficit of around 2% of GDP. Nonetheless, the Philippines holds $103 billion in FX reserves, covering 196% of the IMF metric.
Indonesia, traditionally vulnerable to external shocks, has reverted to a current account deficit after a temporary boost from high commodity prices. This year, the deficit is expected to be about 1% of GDP, potentially extending as capital expenditure projects increase imports. Indonesian FX reserves stand at $136 billion, covering 112% of the IMF adequacy metric.
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