How to beat the heat – Sound Economies with Mel & Peter, 24 September 2026

Let's start in Asia as always, sort of in your backyard.

Yeah, we have a very fresh report from the Asian Development Bank released Wednesday, so yesterday.

It's their updated economic outlook for developing Asia and the Pacific.

Apart from, of course, acknowledging that there really are more downside risks right now due to the oil shock on top of weak domestic consumption in some countries, as well as the lingering trade uncertainty, there's another negative factor that could depress prospects in the next year or so.

And that is the severe El Nino phenomenon.

So that's the drought that would...

most probably be peaking in around November this year, but effects of it will be mostly felt next year.

So that will compound the region's concerns for the medium term.

And the bigger hit would be on food prices.

And that's unfortunate because as we know, the poorer income households would be be most hit the most or they feel the biggest pain because they spend a lot more of their income on food items so that's the story and then if you compare well that they did say that that when you compare the impact of the oil shock and El Nino the bigger one would still be the oil shock so it's still the of the two both are negative uh drivers but oil would still be more uh wide ranging in terms of negative effect versus the other um but what's surprising to me is that despite this warning um growth um forecasts have actually been upgraded for several countries for the year um So for the whole developing Asia-Pacific, the growth forecast is raised to 5% this year and 5.1% next year.

And for ASEAN in particular, it's also been raised to 4.7% for this year and next year.

So it does sound kind of surprising, maybe counterintuitive, but actually...

the secret or the biggest offsetting factor to these negative effects was actually identified as AI-related exports.

So your chips, your electrical components, possibly labor support as well, software, and other hardware related to data centers and artificial intelligence applications.

So it's such a big... push or counterweight to the negative effects of these disruptions.

But it's also not the same as far as ASEAN countries are concerned.

The biggest increases in forecasts for growth would be for Vietnam, Myanmar, and Thailand.

Wow.

Some of them are more into the AI supply chain than the rest, that being Vietnam and Malaysia.

On the other hand, we have Indonesia and the Philippines, which have been downgraded in terms of forecast.

For the Philippines, the forecast is now 3.3%.

The government target has been revised downward several times, but even this 3.3% is below the current forecast.

So it's really not a good picture.

And for Indonesia as well, though it's still much faster at 5.2%, domestic uncertainty in terms of political situation and sentiment are also weighing down prospects.

So it's such a diverse mix.

Let's start in Asia as always, sort of in your backyard.

Yeah, we have a very fresh report from the Asian Development Bank released Wednesday, so yesterday.

It's their updated economic outlook for developing Asia and the Pacific.

Apart from, of course, acknowledging that there really are more downside risks right now due to the oil shock on top of weak domestic consumption in some countries, as well as the lingering trade uncertainty, there's another negative factor that could depress prospects in the next year or so.

And that is the severe El Nino phenomenon.

So that's the drought that would...

most probably be peaking in around November this year, but effects of it will be mostly felt next year.

So that will compound the region's concerns for the medium term.

And the bigger hit would be on food prices.

And that's unfortunate because as we know, the poorer income households would be be most hit the most or they feel the biggest pain because they spend a lot more of their income on food items so that's the story and then if you compare well that they did say that that when you compare the impact of the oil shock and El Nino the bigger one would still be the oil shock so it's still the of the two both are negative uh drivers but oil would still be more uh wide ranging in terms of negative effect versus the other um but what's surprising to me is that despite this warning um growth um forecasts have actually been upgraded for several countries for the year um So for the whole developing Asia-Pacific, the growth forecast is raised to 5% this year and 5.1% next year.

And for ASEAN in particular, it's also been raised to 4.7% for this year and next year.

So it does sound kind of surprising, maybe counterintuitive, but actually...

the secret or the biggest offsetting factor to these negative effects was actually identified as AI-related exports.

So your chips, your electrical components, possibly labor support as well, software, and other hardware related to data centers and artificial intelligence applications.

So it's such a big... push or counterweight to the negative effects of these disruptions.

But it's also not the same as far as ASEAN countries are concerned.

The biggest increases in forecasts for growth would be for Vietnam, Myanmar, and Thailand.

Wow.

Some of them are more into the AI supply chain than the rest, that being Vietnam and Malaysia.

On the other hand, we have Indonesia and the Philippines, which have been downgraded in terms of forecast.

For the Philippines, the forecast is now 3.3%.

The government target has been revised downward several times, but even this 3.3% is below the current forecast.

So it's really not a good picture.

And for Indonesia as well, though it's still much faster at 5.2%, domestic uncertainty in terms of political situation and sentiment are also weighing down prospects.

So it's such a diverse mix.