See discussions, stats, and author profiles for this publication at: https://www.researchgate.

net/publication/368645463

Why Inflation Is Poised to Remain ASEAN's Main Economic Concern in 2023

Article · February 2023

CITATIONS READS
0 372

1 author:

Martin Sviatko
CamEd Business School
12 PUBLICATIONS   9 CITATIONS   

SEE PROFILE

All content following this page was uploaded by Martin Sviatko on 19 February 2023.

The user has requested enhancement of the downloaded file.

 1

Why Inflation Is Poised to Remain ASEAN’s Main Economic

Concern in 2023

Martin Sviatko, PhD

CamEd Business School
 2

Abstract

This research paper focuses on the issue of inflation – an economic problem reemerging globally

in the midst of the coronavirus pandemic – and it aims to analyze its debilitating effects on ASEAN

economies. The paper offers an analysis of how global inflation resurfaced as a direct result of

supply chain problems, and how it was exacerbated further by two negative shocks affecting the

global economy – the war in Ukraine and the global energy crisis. Because ASEAN economies

are fully integrated into the global economy, inflation - particularly food inflation - has become

rampant in this part of the world, too. The paper points out that inflation is set to continue causing

economic pains globally in 2023 and ASEAN will be no exception in this regard. For the region’s

policy-makers, inflation is poised to remain the main economic concern throughout 2023

particularly because of two reasons. The first reason is that food prices across the region remain

elevated. The second reason is closely associated with the export-oriented features of the ASEAN

economy. The paper contends that despite the fact that average inflation in ASEAN appears to be

somewhat lower compared to other world regions (the US, EU) as of February 2023 – in view of

the export-oriented nature of ASEAN economies, prolonged global inflation will continue to drive

consumer discretionary spending downward, thus weakening global aggregate demand. As export

forms a significant part of ASEAN’s economic output, this, in turn, will weigh negatively on the

bloc’s overall economic performance. The debilitating effects of inflation strike at a time when

ASEAN seeks a strong rebound following the three painful years of the global pandemic. Either
 3

through elevated food prices or reduced exports, inflation also presents the bloc’s most vulnerable

segment of its population with a significant risk of sliding into poverty – effectively erasing those

gains ASEAN had recorded on this front prior to the pandemic.

Keywords: ASEAN, inflation, global economy, supply chain shocks, energy markets, food

inflation, consumer discretionary spending, 2023.

 4

1. Literature review

In economics, inflation lies at the centre of critical analysis. This is because economists consider

inflation as a crucial economic phenomenon, having a direct impact on a country’s economy as

well as on the real income of individuals.

Inflation can be defined as the increase in prices from year to year (Roubini, 2022); it is the rate

of increase in prices over a given period of time, and it measures how much more expensive a set

of goods and services has become over a certain period, usually a year (Oner, 2023). Broadly

speaking, economists agree that inflation is caused by the gradual increase in the prices of goods

and services throughout the economy and that while low inflation is necessary for the economy,

too much inflation causes serious problems (Tretina, 2022).

But how does inflation come into being? What exactly lies behind the gradual increase in the price

of goods and services? How do we measure inflation? And finally, what are the catalysts for the

global inflation surge we are witnessing today?

While some, including Bank of England Chief Economist H. Pill, suggest that money-printing

throughout the pandemic is to blame for the rocketing inflation that economies around the world

have been experiencing over the past two years (Aldrick & Atkinson, 2022), others point to the

global economy’s structural imbalances. In line with our research objectives, we will opt for the

latter. A good way of answering the above questions is to focus on how inflation is associated with

supply and demand in the economy.

 5

At its root, inflation is driven by too much demand relative to supply. It is the unexpected increase

in demand, or decrease in supply, that sets off inflation. Consequently, as the prices of goods rise,

workers are not able to buy as much with their wages. If the economy experiences supply shocks

– major disruptions to an important economic input, such as energy, inflation arises. If a large

number of oil fields stop producing oil because of a war, the price of energy increases. Since energy

is a critical input into almost every other good, the prices of other things rise, too. This is often

called cost-push inflation (Frick, 2022).

As we will explain in more detail later, the global economy’s structural imbalances, which came

to the fore during the coronavirus pandemic, were partially responsible for the surge of global

inflation. However, before we go into the specifics of this, we first need to answer the question of

how inflation rates are actually calculated. To do so, we turn our attention to the consumer price

index (CPI), which is used by countries to measure their levels of inflation.

Typically, governments calculate inflation by gathering spending data from tens of thousands of

regular consumers across the country. They track a basket of commonly purchased goods and

services including food, gasoline, computers, prescription drugs, or mortgage payments to gauge

how prices generally change over the time (Lavie & Curry, 2022). Such a practice is not only

common in the United States (US) – many other countries around the world opt for the same

procedure when it comes to calculating their national inflation rates.

2. The global inflation surge

Although considered by medical practitioners as primarily a health emergency, the global

coronavirus pandemic was – apart from causing devastating impact on the health of millions – also
 6

responsible for inflicting enormous economic shocks upon the world’s economy. As a result, this

event brought about unprecedented disruptions to the global supply chain. Movement control

orders, coupled with recurrent lockdowns in countries around the world implemented with varying

speed and range, highlighted the absence of broader coordinated efforts between governments at

a time when such endeavors were urgently needed for the overall resuscitation of the global

economy. This, however, was hardly surprising.

Prior to the pandemic, the world’s two largest economies had already been engaged in a trade war

which showed no signs of abating. From an economic perspective, this meant that the global

economy and its supply chain were already weakened before the pandemic struck. Moreover, this

atmosphere of rising political tensions and heightened mistrust also meant that countries were

likely to carry on with unilateral decision-making on a whole range of policies, including economic

ones.

Once confronted by the pandemic, countries – guided by this way of thinking – to a large extent

acted unilaterally in their decisions to impose or lift lockdowns in a bid to find a delicate balance

between saving people’s lives and protecting their economies. Such realities ensured that the path

to global economic recovery was inevitably going to be long, uneven, multi-speed, and fraught

with risks.

For instance, even if some countries proceeded with a quick reopening of their economies, such

moves did not necessarily produce the desired effects – particularly if we consider the fact that the

countries rarely saw their economies returning to operate at full capacity immediately after

reopening. On a micro level, a lack of workforce became evident, and these problems persisted
 7

well into 2022. On a macro level, it was largely the supply problems in the economy that were

brought to the fore – documenting just how intertwined and interconnected the global economy

has become over the course of the past three decades. And from a purely consumer-centric

perspective, the empty shelves that many shoppers experienced at local grocery stores were

testament to the fact that economic recovery was indeed going to be fraught with problems.

To elaborate on this point further, it is important to note that as the pandemic hampered factory

operations and sew chaos in global shipping, many economies around the world were bedeviled

by shortages of a vast range of goods – from electronics to clothing. Automakers were crippled by

a shortage of computer chips – vital car components mostly produced in Asia. Without enough

chips on hand, auto companies from India to the US were forced to halt assembly lines (Goodmand

& Chokshi, 2021).

In addition, it was not only a shortage of microchips or semiconductors which gave reason for

concern. Food shortages became a very common occurrence, too. A combination of factors such

as labor scarcity, problems in logistics, hard lockdowns, and restrictions imposed on food

processing in plants – to name a few – led to an unprecedented disruption of food supply chains.

Such a reality unfolding alongside the raging pandemic implied that either food was not being

supplied on time, or it was being supplied in insufficient quantities to meet existing demand.

Perhaps unsurprisingly, food prices all around the world soared quickly and considerably.

If the global inflation rate stood at 3.23 % in 2020, then by 2021, it had increased to 4.7 % (Statista,

2023). Such an increase in inflation can certainly be attributed to the global economy’s structural

disconnect. However, matters were set to get worse in 2022 – not because of pandemic-induced
 8

supply chain shocks or the global economy’s structural disjoints, but primarily because of man-

made problems. These problems – as we will explain shortly – ramped up inflationary pressures,

effectively thwarting hopes that the global economy would recover quickly.

The problems of underperforming supply chains were exacerbated further by two negative shocks

which occurred in early 2022: the war in Ukraine, and the global energy crisis. As a direct result

of these events, the global inflation rate increased rapidly to 8.8 % in 2022 (IMF, 2022) – with

many countries around the world experiencing double digit inflation. As we will point out later, it

appears that inflation is set to continue causing economic pains globally in 2023 as well.

Putin’s ‘special military operation’ not only set off the largest armed conflict Europe has witnessed

since the end of World War II, but given the fact that Russia’s officials repeatedly hinted at the

possibility of deploying nuclear weapons should the conflict escalate, the war in Ukraine carries

the potential to destabilize the whole system of international relations for many years to come.

Moreover, the conflict is unfolding in the same geopolitical region which previously gave rise to

two catastrophic world wars – hence, it cannot be taken lightly.

Apart from the political perspective, the ongoing armed conflict has also produced a host of

negative impacts on the global economy in general, fueling the surge in inflation in particular. The

war not only locked two different nation-state actors into a mutual conflict – from an economic

point of view, the war is taking place between the world’s two major producers of food and energy

commodities.

Known for its fertile black soil, chernozem, Ukraine is one of the world’s major grain producers

and exporters. The country mainly grows and exports wheat, corn and barley. The country accounts
 9

for 10 % of the world wheat market, 15 % of the corn market, and 13 % of the barley market. With

more than 50 % of world trade, it is also the main player of the sunflower oil market (Eisele, 2022).

But the war has severely hampered the country’s capacity to maintain its grain production at the

same levels. It is therefore unsurprising that Ukraine recorded a 53.2 % decrease in wheat exports

in 2022 (Nandy, 2022). This understandably complicates the already difficult situation that the

global food markets face amid the pandemic.

As the Russian military – a mixture of regular army, mercenaries, and convicts – lay waste to

Ukraine, paradoxically, Russia, too, became exposed to the adverse economic consequences of the

very same war it initiated. The country is positioned as a major producer and exporter of oil, with

a significant portion of it flowing to Europe. Being aware of such realities, Putin has long sought

to weaponize Russia’s oil and gas of supplies to Europe, and his first attempts to use this policy

date back to 2009, when gas supplies to Central and Eastern European countries such as Bulgaria,

Hungary, Romania, Slovakia were abruptly halted.

In 2022, attempting to reduce dependency on Russian gas, Europe turned to another of the world’s

leading gas producers: Qatar. Numerous countries have since imposed sanctions on Russia,

targeting its banks, oil refineries and military exports in a direct response to Russia’s aggression.

The subsequent energy war, which came in the aftermath of the invasion of Ukraine, has caused

oil prices to reach heights not seen since the 2008 financial crisis. In December 2022, a price cap

on Russian seaborne oil was agreed upon by the European Union (EU), the Group of Seven nations,

and Australia in a bid to limit Moscow’s ability to finance the war through commodity exports.

(Al Jazeera, 2020).

 10

Disruptions caused by Russia’s invasion of Ukraine, the ensuing economic sanctions on Russia

and its potential retaliation have severely affected global commodity markets. Prices of oil, gas

and certain agricultural products have risen, intensifying inflationary pressures and threating food

security in some developing countries. Uncertainty also struck markets in relation to metals, with

prices of aluminum and nickel reaching their 10-year high in February 2022 (OECD, 2022).

As the armed conflict spills into 2023 and enters its second year, it shows no signs of weakening

and uncertainties continue to surround global energy markets – ensuring that inflationary pressures

will remain a major cause of concern for global policy-makers throughout the year. It is only

rational to expect that the longer the conflict lasts, the longer it will take for the energy, commodity,

and food markets to return to normalcy. For now, it looks like inflation is poised to remain elevated

in the near future.

3. Inflation in ASEAN

Since the Association of Southeast Asian Nations (ASEAN) economies are fully integrated into

the global economy, the region has not been able to escape the debilitating effects of inflation.

Inflation has become rampant in this part of the world, too, and this problem was already detectable

in 2021. The subsequent economic shocks, which we mentioned earlier, compounded the problem.

In addition, the ASEAN economy is also confronted by the possibility of slower economic growth

as a direct result of accumulated shocks and disruptions.

This is because when economic shocks come from the supply side – an oil-price shock, or a rise

in food or other commodity prices – they typically cause a rise in energy and production costs,
 11

contributing to lower growth in countries that import fuel of food. As a result, a slowdown of

growth or even a recession may occur, while inflation remains high (Roubini, 2022).

To elaborate on this point further, it is important to note that although many ASEAN countries are

engaged in the production of oil and gas, the daily output of these commodities is too low to win

them a permanent seat at OPEC – with Indonesia being the exception. Because of their moderate

oil output, ASEAN countries could not capitalize on the rise of oil prices throughout 2022 the same

way their Asian counterparts in the Gulf region did. Accordingly, the inflationary pressures that

ASEAN countries recorded mostly in 2022 stemmed from the necessity to import fuel, the cost of

which had increased significantly.

As if things were not bad enough, the sharp rise in oil prices were accompanied by a hike in the

cost of electricity, too. This was, understandably, bad news for those ASEAN member-states such

as Cambodia and Myanmar which import electricity from neighboring countries, namely Vietnam

and Thailand. This factor also intensified inflationary pressures for the bloc’s newest members.

Overall, the surge of inflation in ASEAN countries can be attributed to the very same factors which

pushed consumer prices higher in other parts of the world – particularly in Europe and North

America.

It is, therefore, hardly surprising to see the average inflation rate in ASEAN countries increasing

from 0.9 % – a number recorded in January 2021 – to 4.7 %, which was registered in April 2022.

On top of this, four ASEAN countries experienced a very rapid increase in their inflation rates:

Indonesia (149 %), Singapore (161 %), Laos (206 %), and Thailand (267 %) (Suvannaphakdy,

2022).
 12

But it was not only the rapid increase in the rate of inflation that was striking. Given the significant

economic disparities, coupled with widespread differences in public governance among ASEAN

member-states, registered levels of inflation differed markedly across the region, too.

For example, if Laos recorded a stunning level of inflation, which stood at 39.27 % in December

2022 (The Star, 2023), Singapore’s inflation, by contrast, was only 5.1 % for the same month

(CNA, 2023), while Malaysia’s inflation rate stood at 3.8 % in December 2022 (Business Today,

2023). It is noteworthy that such significant differences in the inflation rates among countries did

not occur only within ASEAN. Fairly similar disparities can also be observed in another

supranational entity – the European Union (EU).

Regardless of the actual inflation rate and the speed of its increase, what all ASEAN countries had

in common was the emergence of food inflation. And one good way of assessing the issue of

runaway food inflation is to look at a simple food basket consisting of three ingredients we choose

to refer to. From the end of 2019 until April 2022, while the World Bank’s food price index only

increased by 54 %, the price of chicken meat increased by 83.4 %, and the price of maize and soya

grew by 108.5 % and 88.1 % respectively (Lee, 2022).

To counter the problem of food inflation, ASEAN countries deployed a variety of measures

ranging from imposing price ceilings on certain food to implementing price controls or placing

export restrictions. These, on the one hand, helped stabilize prices. They also helped tackle the

issue of profiteering. On the other hand, governments cannot rely on such measures indefinitely,

especially when we consider the fact that imposing export restrictions only adds to the existing

problem of supply chain disruptions, as rising protectionist economic policies hamper the global
 13

economy’s recovery process. In the long run, they do more harm than good, particularly if those

countries affected adversely are the member-states of the same regional bloc.

Furthermore, food inflation across ASEAN presents the organization with a delicate problem.

From the bloc’s ten member-states, only Indonesia, Malaysia, Thailand, and Vietnam are net food

commodity exporters. Thus, they may be better placed to withstand global food price shocks, as

local supplies are generally able to meet domestic needs (Amro, 2022). This puts the remaining

ASEAN member-states at a grave disadvantage once supply disruptions or rapid rise in food prices

occur.

Being a net food exporter certainly helps in times of crisis, but it is not everything – a country’s

national income matters, too. Apart from Singapore and Brunei – commonly recognized as high-

income economies – the remaining eight ASEAN member-states are currently defined as middle-

income economies, with a vast majority of ASEAN households being either low or medium-

income categories.

Moreover, even countries which are on the brink of becoming a high-income economy, such as

Malaysia, record mediocre outcomes on this front – the median monthly salary and wage is only

2,062 ringgits (Lim, 2021), which is the equivalent of USD 485. Thus, even a minor increase in

inflation has negative implications for ASEAN citizens – for both city dwellers as well as those in

rural areas.

On top of this, food consumption accounts for a large portion of what people spend their money

on. Only in 2021, Filipino households spent nearly 40 % of their total expenditure on food and

non-alcoholic beverages. In comparison, US households spent only 8.6 % of their disposable

 14

income on food. Therefore, the large risk of social unrest in the case of large surges in food prices

in Southeast Asia should not be underestimated (Ong, 2022).

Food inflation, therefore, strikes at a time when ASEAN countries were hoping to turn the page

on the global pandemic, which wreaked unprecedented havoc on the bloc’s economy. Due to

recurrent lockdowns, entire industries came to a halt, causing a rapid rise in unemployment on a

scale which has not been seen in the region since the days of the 1997 Asian financial crisis.

Consequently, food handouts, along with irregular cash assistance – once considered a relic of the

past – became a common sight once more.

For ASEAN’s labor force, food inflation gives a terrible blow to any hopes of a quick return to

pre-pandemic normalcy. For informal economy workers as well as the most vulnerable parts of its

population, it means that the risk of sliding into poverty is very real – effectively reversing those

gains ASEAN had achieved over the past two decades.

Paradoxically, food inflation not only threatens to undo the hard-fought progress in reducing

poverty the region had recorded, it also hampers the prospect of securing basic education for the

region’s youth. In Indonesia, for instance, widely shared reports of families having to choose

between sending their children to school or putting food on the table tell a very depressing story

(Yuniar, 2022). Equally dismal realities are emerging elsewhere in the region – in Cambodia,

Vietnam, Laos, East Malaysia, and the Philippines – a testament to the fact that the costs of living

crisis has emerged just as quickly and silently as the coronavirus pandemic itself.
 15

4. Why inflation will remain the bloc’s main economic concern in 2023

Because inflation is set to continue causing economic pains globally in 2023, too – with ASEAN

being no exception in this regard – it is conceivable to expect the bloc’s policy-makers to pay close

attention to this problem. We believe that inflation is poised to remain ASEAN’s main economic

concern throughout 2023 primarily because of two reasons.

The first reason is that food prices across the region remain elevated. So long as the underlying

factors facilitating the emergence of food inflation remain unchanged, the problems of food

inflation will persist. Due to the fact that prolonged food inflation in particular increases the risks

of social unrest, governments will not be able to take their eyes off this issue. As we saw in the

case of some ASEAN countries, failure to do so may turn out to be too costly for the government

of the day. Rising costs of living and a rapid increase in food prices commonly become voters’

main source of concern – and rightly so. In Malaysia, for instance, those concerns precipitated the

fall of the government in 2022. Elsewhere in the region, the possibility of similar political changes

taking place in 2023, therefore, cannot be discounted.

The second reason why ASEAN will remain preoccupied with inflation in 2023 is more complex.

In order to explain it, we need to shed light on the current state of economic affairs persisting

beyond the region’s boundaries. What is more troubling for ASEAN is that the bloc is currently

not in a position to exercise any influence with respect to economic realities taking place in the

world’s more developed regions.

Despite the fact that the average inflation in ASEAN countries as of February 2023 is somewhat

lower than that of other regions, such as the US or EU – in view of the export-oriented nature of
 16

ASEAN economies, prolonged global inflation is still poised to hurt ASEAN – although indirectly.

It is because prolonged global inflation is expected to drive consumer discretionary spending

downward, hence weakening the global aggregate demand. Both the US and EU are the traditional

export markets for products made in ASEAN from chips and semiconductors to rubber gloves,

from apparel and clothing to edible oil. This has come to be as a result of the convergence of two

different processes. The first one is export-oriented manufacturing, which was adopted by Asian

countries from the early 1970s onwards, and which was often hailed as the fastest way out of

poverty. The second is outsourcing and offshoring, which has shifted large parts of industrial base

from western countries to Asia over the past four decades.

Now that inflation is inflicting pain on Western countries and their consumers – with the US

inflation rate hovering around 6.5 % (Moore, 2023) and Euro-zone inflation sitting at 8.5 %

(Randow, 2023), export-led manufacturing is losing steam in Asia, rendering them unable to

replicate their stellar results of past decades.

In the beginning of the paper, we stated that economists analyze inflation based on its impact on

the real income of individuals as well as their purchasing power. We have also shown what

inflation means for most of ASEAN citizens, whose average monthly earnings hardly exceed USD

500. We would like to incorporate one more element into our analysis – and that is the concept of

discretionary spending.

The topic of discretionary spending is a complicated matter. On the one hand, because of differing

levels in standard of living, the world’s most developed regions may be better positioned to
 17

withstand inflationary pressure than others. But on the other hand, the recent surge of inflation

showed unprecedented ability to hit more developed countries as well.

According to a recent YouGov survey, 55 % of Americans have felt the impact of high inflation

on their lives ‘a lot’ (Orth & Bialik, 2022). Thus, the global inflation appears to be hitting

developed as well as developing countries.

Irrespective of the standard of living citizens enjoy in different countries, when it comes to the

topic of consumer buying behavior in general, and consumer discretionary spending at a time of

surging inflation in particular, a certain pattern emerges practically everywhere. As inflations bites

and steadily reduces the purchasing power of households, they have no choice but to curb

unnecessary spending on things they do not really need for their day-to-day running. In practice,

this means a family may defer their holiday plans, which is obviously bad news for tourism-

dependent ASEAN countries, or it may decide to delay the purchase of a new car, TV set, kitchen

appliance, or smartphone.

If such decisions are made by a large number of consumers simultaneously, regardless of their

location, then from a logistical point of view, companies are presented with the inventory problem.

From a financial perspective, reduced demand typically results in profit declines – both for B2C

as well as B2B markets. As a result of runaway inflation, corporate earnings take a direct hit.

This is exactly what global tech businesses began to witness from the second part of 2022 onwards.

For example, Samsung’s profit in the last quarter of 2022 fell by 69 % – down to 4.3 trillion won

(USD 3.37 billion) from 13.87 trillion won a year earlier (CNBC, 2023). As corporate earnings

decline, businesses may face harder times raising their capital in financial markets. The layoff of
 18

workers many tech enterprises proceeded with in late 2022 and early 2023 suggest that they expect

the complicated economic climate to persist in the near future.

This puts ASEAN economy in a precarious position. Because the export of industrial products

creates a significant part of ASEAN’s economic output – with the estimated value of USD 1.36

trillion in 2020 alone (Statista, 2022) – any downtick in its volume will weigh negatively on the

bloc’s overall economic performance. For ASEAN, this indicates the prospect of slower economic

growth occurring precisely at a time when it needs to strongly rebound from the global pandemic.

Because the export of electrical equipment and parts to the US or EU markets is one of the

ASEAN’s top export components, this, understandably, raises the risk of declining orders for such

products manufactured across the ASEAN region.

But reduced consumer discretionary spending does not only apply for electronics and digital

devices at a time of runaway inflation, it usually extends to other products, too: machinery,

mechanical appliances, vehicle parts, and finally, garment products – all of which constitute

ASEAN’s main export constituents.

Many textile and garment factories in Vietnam recorded a sharp drop in export orders – mainly in

the US and EU in late 2022 – because inflationary pressure in these nations is large, forcing

consumers to tighten spending (Viet Nam News, 2022). Unless inflation decreases quickly, this

reality is poised to continue throughout 2023, putting countries such as Vietnam, Cambodia, and

to a minor extent, Indonesia and Thailand in a difficult situation.

Understandably, this is terrible news for the ASEAN workers employed in the industrial sector of

the economy, who hoped to offset rising inflation by working longer hours – only to find out that
 19

their service may no longer be needed due to dwindling purchase orders. In spite of the fact that

the current economic development across the region does not resemble the Great Recession of

2008, nor bear a striking similarity with the 1997 Asian financial crisis, it still raises the

fundamental question whether it is reasonable to talk about economic recovery while a substantial

part of workforce faces a twofold setback – the rising cost of living and decreasing employment

opportunities.

5. Conclusion

As reduced consumer spending becomes a new reality in the West, the bloc is, understandably,

compelled to act quickly and find a new market for its industrial products elsewhere. But in the

context of global inflation this could be easier said than done.

Under the current circumstances of having the world’s two main economic centers – the US and

EU – plagued by high inflation, many in ASEAN pin their hopes on China, which is slowly

emerging from self-isolation as of early 2023. Given the fact that China is the bloc’s largest trading

partner, such a line of thinking may not be unfounded. China has long been a major destination for

ASEAN’s agricultural products, and its appetite for importing food from abroad remained intact

throughout the pandemic. It remains to be seen whether the world’s second largest economy may

help ASEAN to overcome current economic difficulties when it comes to ASEAN’s export of

manufacturing products.

Looking beyond February 2023, it appears that inflation is here to stay throughout the year, as the

underlying conditions for its emergence have not changed. Although the pandemic slowly eases

globally, long-standing geopolitical rivalries, coupled with a protracted conflict in Ukraine,

 20

whipped nationalism, and rising protectionist sentiments continue to undermine the stability of the

global economy. Because of the rising cost of living ASEAN citizens are confronted by, the

regional bloc will be compelled to consider inflation as its main economic concern of 2023. Given

the hardship many ASEAN citizens have experienced over the past three years, ignoring inflation

is a mistake the region’s decision-makers cannot afford to make.

 21

References

Aldrick, P. & Atkinson, A. (2022, November 8). Bank of England Chief Economist

Suggests Pandemic QE a Mistake. Bloomberg.

https://www.bloomberg.com/news/articles/2022-11-08/bank-of-england-chief-

economist-suggests-pandemic-qe-a-mistake?leadSource=uverify%20wall

Al Jazeera. (2022, December 5). Infographic: How much oil does Russia produce?

https://www.aljazeera.com/news/2022/12/5/infographic-how-much-oil-does-

russia-produce

Amro. (2022, September 14). Feeding Inflation in ASEAN+3: The Rising Price of Food.

https://www.amro-asia.org/wp-content/uploads/2022/09/AMRO-Analytical-

Note_Feeding-Inflation-in-ASEAN3_The-Rising-Price-of-Food_14-September-

2022_.pdf

Asian Development Bank. (2022, December). Asian Development Outlook: Economic

Forecasts. https://www.adb.org/outlook

Asian Development Bank. (2022, September). Asian Development Outlook: Economic

Forecasts. https://www.adb.org/what-we-do/economic-forecasts/september-

2022/country-outlook#accordion-3-4
 22

Baraniuk, C. (2021, August 27). Why is there a chip shortage? BBC News.

https://www.bbc.com/news/business-58230388

Barnes, M. (2022, November 11). Vietnamese Garment Makers Hit Snag: Omen or

Opportunity. Vietnam Briefing. https://www.vietnam-

briefing.com/news/vietnamese-garment-makers-hit-snag-omen-or-

opportunity.html/

Berlinger, J. (2022, March 5). Four ways the world has changed since Russia invaded

Ukraine. CNN. https://edition.cnn.com/2022/03/05/europe/world-changes-ukraine-

russia-intl-cmd/index.html

Bernanke, B. S. (2022). 21st Century Monetary Policy: The Federal Reserve from the Great

Inflation to COVID-19. W. W. Norton & Company.

Bove, T. (2023, February 15). Inflation will remain ‘sticky’ for a decade because Gen Z

and millennials are in their prime spending years, an investment chief says.

Fortune. https://fortune.com/2023/02/14/smead-sticky-inflation-decade-

millennials-gen-z-spending/

Business Today. (2023, January 20). Malaysia’s Inflation Rate Eases To 3.8 % As Sector

Consumer Prices Dip in December 2022, States Stats Dept.

https://www.businesstoday.com.my/2023/01/20/malaysias-inflation-rate-eases-to-

3-8-as-sector-consumer-prices-dip-in-dec-2022-states-stats-

dept/#:~:text=Malaysia's%20inflation%20eased%20to%203.8,(November%20202

2%3A%204.0%25)
 23

Chua, J. M. (2022, July 28). Breakneck Inflation Shrinks Bangladesh, Vietnam Garment

Orders. Sourcing Journal.

https://sourcingjournal.com/topics/sourcing/bangladesh-vietnam-garment-export-

orders-inflation-walmart-apparel-clothing-357029/

Cox, J. (2021, March 10). A year after the pandemic struck, the U.S. economy is still

struggling but coming around quickly. CNBC.

https://www.cnbc.com/2021/03/10/a-year-after-the-pandemic-struck-the-us-

economy-is-still-struggling-but-coming-around-quickly.html

CNA. (2023, January 25). Singapore’s core inflation unchanged at 5.1 % in December,

averaged 4.1 % for 2022. https://www.channelnewsasia.com/business/singapore-

core-inflation-december-2022-food-prices-services-3229701#:~:text=Business-

,Singapore's%20core%20inflation%20unchanged%20at%205.1%25%20in%20De

cember%2C%20averaged%204.1,per%20cent%20recorded%20in%202021

CNBC. (2023, January 5). Samsung estimates quarterly profit sank to 8-year low on

demand slump. https://www.cnbc.com/2023/01/06/samsung-electronics-flags-

lowest-quarterly-profit-in-8-years-on-demand-slump.html

Department of Statistics Malaysia. (2022, December 23). Consumer Price Index Malaysia

November 2022.

https://www.dosm.gov.my/v1/index.php?r=column/cthemeByCat&cat=106&bul_

id=WWx2a3UxcklKQ3NraFBHSkhhZXRWdz09&menu_id=bThzTHQxN1ZqM
 24

VF6a2I4RkZoNDFkQT09#:~:text=Malaysia's%20inflation%20in%20November

%202022,the%20same%20period%20in%202021

Duggal, H. & Haddad, M. (2022, February 17). Infographic: Russia, Ukraine and the global

wheat supply. Al Jazeera. https://www.aljazeera.com/news/2022/2/17/infographic-

russia-ukraine-and-the-global-wheat-supply-interactive

Eisele, I. (2022, January 11). Five facts on grain and the war in Ukraine. DW.

https://www.dw.com/en/five-facts-on-grain-and-the-war-in-ukraine/a-

62601467#:~:text=According%20to%20statistics%20by%20the,the%20union's%

20member%20states%20together

Frick, W. (2022, December 23). What Causes Inflation? Harvard Business Review.

https://hbr.org/2022/12/what-causes-

inflation#:~:text=It's%20the%20unexpected%20increase%20in,as%20much%20

with%20their%20wages

Goodman, P. S. & Chokshi, N. (2022, October 21). How the World Ran Out of Everything.

The New York Times. https://www.nytimes.com/2021/06/01/business/coronavirus-

global-shortages.html

Gerber, J. (2005). International Economics. Pearson.

Hoang, L. (2022, October 18). Vietnamese factories go idle as orders from the West slow.

Nikkei Asia. https://asia.nikkei.com/Spotlight/Supply-Chain/Vietnamese-factories-

go-idle-as-orders-from-the-West-slow
 25

International Monetary Fund. (2022, October). World Economic Outlook: Countering the

Cost-of-Living Crisis. file:///C:/Users/Surface%20-PC/Downloads/text.pdf

Lavie, D. & Curry, B. (2022, October 13). How To Calculate Inflation: PCI & CPI. Forbes.

https://www.forbes.com/advisor/investing/how-to-calculate-inflation/

Lee, H. G. (2022, June 7). Courage needed to combat food inflation. The Star.

https://www.thestar.com.my/business/business-news/2022/06/07/courage-needed-

to-combat-food-inflation

Lim, I. (2021, July 14). Malaysians’ average median salaries in 2020 fall for first time since

2010 to RM 2,933, RM2,062. Malay Mail.

https://www.malaymail.com/news/malaysia/2021/07/14/malaysians-average-

median-salaries-in-2020-fall-for-first-time-since-2010-t/1989755

McGee, L. (2023, January 16). Europe’s warm winter is robbing Putin of a trump card.

CNN. https://edition.cnn.com/2023/01/16/europe/europe-putin-warm-winter-

intl/index.html

Miller, C. (2022). Chip War: The Fight for the World’s Most Critical Technology. Scribner.

Moore, S. (2023, January 23). What To Expect From February’s CPI Inflation Numbers.

Forbes. https://www.forbes.com/sites/simonmoore/2023/01/23/what-to-expect-

from-februarys-cpi-inflation-numbers/

Nandy, S. (2022, August 1). Ukraine’s wheat exports slump 53 % on year to 325,000 mt

in MY 2022-23. S&P Global.

 26

https://www.spglobal.com/commodityinsights/en/market-insights/latest-

news/agriculture/080122-ukraines-wheat-exports-slump-53-on-year-to-325000-

mt-in-my-2022-23

OECD. (2022, August 4). The supply of critical raw material endangered by Russia’s war

on Ukraine. https://www.oecd.org/ukraine-hub/policy-responses/the-supply-of-

critical-raw-materials-endangered-by-russia-s-war-on-ukraine-e01ac7be/

Oner, C. (2023, January 11). Inflation: Prices On The Rise. International Monetary Fund.

https://www.imf.org/en/Publications/fandd/issues/Series/Back-to-

Basics/Inflation#:~:text=Inflation%20is%20the%20rate%20of,of%20living%20in

%20a%20country

Ong, C. (2022, May 9). Southeast Asia may face a ‘big risk’ of social unrest if food prices

keep surging. CNBC. https://www.cnbc.com/2022/05/09/big-risk-of-unrest-in-

asean-if-food-inflation-surges-says-economist.html

Orth, T. & Bialik, C. (2022, November 5). What Americans know – or think they know –

about inflation. YouGov America.

https://today.yougov.com/topics/economy/articles-reports/2022/11/04/what-

americans-know-about-inflation-yougov-poll

Prum, V. (2022, December 29). Who knows where the world is going? The Phnom Penh

Post. https://www.phnompenhpost.com/opinion/who-knows-where-world-going
 27

Randow, J. (2023, February 1). Euro-Zone Inflation Eases as ECB Debate Over Rates

Heats Up. Bloomberg. https://www.bloomberg.com/news/articles/2023-02-

01/europe-inflation-latest-prices-slow-before-ecb-interest-rate-hike

Reuters. (2022, August 15). Ukraine’s grain exports down by almost half despite unblocked

ports, ministry says. https://www.reuters.com/markets/commodities/ukraines-

grain-exports-down-by-almost-half-despite-unblocked-ports-ministry-2022-08-

15/

Rickards, J. (2022). Sold Out: How Broken Supply Chains, Surging Inflation, and Political

Instability Will Sink the Global Economy. Portfolio.

Roubini, N. (2022). Megathreats: Ten Dangerous Trends That Imperil Our Future, And

How to Survive Them. Little, Brown and Company.

Roubini, N. (2022, October 13). We’re Heading for a Stagflationary Crisis Unlike

Anything We’ve Ever Seen. TIME. https://time.com/6221771/stagflation-crisis-

debt-nouriel-roubini/

Shanmugam, M. (2023, February 2). Alternative Views: No quick fix for rising consumer

prices. The Edge Malaysia. https://www.theedgemarkets.com/node/653388

Statista (2023, February 5). Export value of the ASEAN region from 2011 to 2020.

https://www.statista.com/statistics/646701/export-values-in-asean-region/
 28

Statista. (2023, January 2). Global inflation rate from 2000 to 2021, with forecasts until

2027. https://www.statista.com/statistics/256598/global-inflation-rate-compared-

to-previous-year/

Stiglitz, J. E. (2022, February 7). A Balanced Response to Inflation. Project Syndicate.

https://www.project-syndicate.org/commentary/inflation-causes-and-targeted-

solutions-by-joseph-e-stiglitz-2022-02

Stiglitz, J. E. (2019). Measuring What Counts: The Global Movement for Well-Being. The

New Press.

Stiglitz, J. E. (2010). Freefall: America, Free Markets, and the Sinking of the World

Economy. W. W. Norton & Company.

Summers, L. H. (2022, December 19). What the Fed should do next on inflation. The

Washington Post. https://www.washingtonpost.com/opinions/2022/12/19/larry-

summers-fed-inflation-next-steps/

Suvannaphakdy, S. (2022, June 20). Inflation: The Threat to ASEAN Economic Recovery

in 2022 and Beyond. The Diplomat. https://thediplomat.com/2022/06/inflation-the-

threat-to-asean-economic-recovery-in-2022-and-beyond/

Sviatko, M. (2022, March 1). What Germany’s Foreign Policy Reversal Means for Asia.

https://www.researchgate.net/publication/359230123_What_Germany's_Foreign_

Policy_Reversal_Means_for_Asia
 29

Sviatko, M. (2019, July). The US-China Trade War and Its Ramifications for ASEAN.

Journal of Accounting, Finance, Economics and Social sciences, 7 (1). Pp. 133-

140.

Szegedi, K. (2023, January 12). COVID-19 has broken the global food supply chain. So

now what? Deloitte. https://www2.deloitte.com/ch/en/pages/consumer-

business/articles/covid19-has-broken-the-global-food-supply-chain.html

Tan, Huileng. (2020, September 9). Global food prices have been rising during the

coronavirus pandemic, hitting food security. CNBC.

https://www.cnbc.com/2020/09/09/global-food-prices-have-been-rising-during-

pandemic-hitting-food-security.html

The ASEAN Secretariat. (2021). ASEAN Key Figures. https://www.aseanstats.org/wp-

content/uploads/2021/12/ASEAN-KEY-FIGURES-2021-FINAL-1.pdf

The Star. (2023, January 6). Inflation in Laos soars to its highest rate at 39.27 per cent in

December. https://www.thestar.com.my/aseanplus/aseanplus-

news/2023/01/06/inflation-in-laos-soars-to-its-highest-rate-at-3927-per-cent-in-

december#:~:text=VIENTIANE%2C%20Jan%206%20(Loatian%20Times,figure

%20of%2038.46%20per%20cent

The Star. (2022, July 29). Laos among countries with highest inflation in South-east Asia.

https://www.thestar.com.my/aseanplus/aseanplus-news/2022/07/29/laos-among-

countries-with-highest-inflation-in-south-east-asia
 30

The World Bank. (2010). Metadata Glossary.

https://databank.worldbank.org/metadataglossary/world-development-

indicators/series/FP.CPI.TOTL

Tretina, K. (2022, October 13). What Causes Inflation? Forbes.

https://www.forbes.com/advisor/investing/what-causes-inflation/

Tridge. (2022, August 11). Poor Pay More: Food Inflation is Hitting Developing Countries

Harder, Tridge Study Finds. https://www.globenewswire.com/en/news-

release/2022/08/12/2497287/0/en/Poor-Pay-More-Food-Inflation-is-Hitting-

Developing-Countries-Harder-Tridge-Study-Finds.html

Viet Nam News. (2022, September 27). Garment, textile, footwear industries face

declining in orders. https://vietnamnews.vn/economy/1338566/garment-textile-

footwear-industries-face-declining-in-orders.html

Vu, K. (2022, November 7). Weakening global demand hurts Vietnam’s garment makers

- industry official. Reuters. https://www.reuters.com/markets/asia/weakening-

global-demand-hurts-vietnams-garment-makers-industry-official-2022-11-07/

Yuniar, R. W. (2022, September 25). Indonesians made to choose between food and school

fees as inflation hits poorest hardest. This Week in Asia.

https://www.scmp.com/week-asia/economics/article/3193521/indonesians-made-

choose-between-food-and-school-fees-inflation

View publication stats