经济月报（2022年10月）

MONTHLYECONOMICBULLETIN October 2022 Global: Bigger challenges ahead China Challenging to boost growth in a fragile economy given zero-Covid policy, weakening economic drivers, and latesttechnology restrictions.Unlikely to relax zero-Covid policy before Q2/2023.The government needs to rely on infrastructure spending tostimulate growth but they must proceed with caution due tohigh debt levels. EuropeEconomy might fall into recession in Q4 amid weaker consumption, worsening energysupply crunch, and tightening monetaryconditions.Price-cap is designed to tame energy pricesbut would not resolve the supply disruptiontriggered by the loss of Russian gas.ECB is still a long way behind other majorcentral banks. US Japan Current economic expansion with risk ofentrenched inflation suggests Fed willremain hawkish.The Fed’s recent downward revision of itsGDP projection and upward revision ofinflation forecast suggest it intends tocontrol inflation by scarifying economicgrowth.Rising risk of an economic recession butthere is less risk of systemic damage thanduring the 2008 financial crisis. Expect a gradual recovery with animproving services sector, but growthwould be capped by intensifying globalheadwinds.With inflation set to fall back belowthe 2.0% target next year, we expectthe BOJ to stick to its ultra-loosemonetary policy. IMFseesbigchallengesfortheglobaleconomy,shapedbylingeringeffectsoftheRussian-Ukrainewar,acost-of-livingcrisis,andeconomicslowdowninChina TheIMFprojectsglobalgrowthwillslowdownfrom3.2%in2022to2.7%in2023(0.2percentagepointsbelowJulyforecast).Thereisa25%probabilitythat2023growthcouldfallbelow2%.Morethanathirdoftheglobaleconomywillcontractthisyearornext.Downsiderisksremainelevated. Globalmanufacturingactivityhasdroppedtocontractionzonedespiteeasingsupplydisruption;weakerorderssuggeststradeflowswillcontinuetoslowdown US:CurrenteconomicexpansionwithriskofentrenchedinflationsuggestsFedwillremainhawkish,whichraisesfearsofarecessionintheperiodahead KrungsriResearch’sview Afterthe75-bpratehiketo3.0-3.25%inSeptember,theFOMCisexpectedtomaintainitsrestrictivepolicyforfollowingreasons:(i)Currenteconomicexpansionwitharobustlabormarket(upbeatjobsdata);(ii)riskofentrenchedinflationremainshighwithConsumerPriceIndex(CPI)stayingabove8%fortheseventhstraightmonthinSeptember,CoreCPIrisingto6.6%andone-andthree-yearforwardinflationexpectationstillabovethe2%targetat5.4%and2.9%,respectively;(iii)TheFed’srecentdownwardrevisionofGDPgrowthprojectionandupwardrevisionofinflationforecastfor2022-2024suggestitintendstocontrolinflationbyscarifyingeconomicgrowth.TheFed’sDotPlotshowsasteeperpathforFedFundsRatethanatthepreviousmeeting.Themedianparticipantseesratesendingtheyearat4.4%,implyingafourthconsecutive75bphikeislikelyinNovemberandanother50bphikeinDecember.ThemedianFOMCmembersrevisedup2023terminalrateto4.6%(comparedto3.8%inthepriormeeting).Riskofeconomicrecessionisrisingbutrisksoffinancialturmoilorsystemicdamageislowerthanduringthe2008financialcrisis,givenahealthierbankingsystemwithhighercapital(Tier1capitalratio13.6%currentlyvs10.1%in2008),smallershareofshort-termfunding(4.2%ofassetsvs21.0%),higherliquidity(loan-to-depositratio0.6%vs1.1%),andrecordlowdelinquencyrateforconsumerloans(below2%).Nonetheless,asharpincreaseininterestratescoupledwithavolatilefinancialmarketcouldhurtsentimentandconsumerspendingandreducebusinessinvestmentintheperiodsahead. Europe:MightfallintorecessioninQ4amidweakerconsumption,worseningenergysupplycrunch,andtighteningmonetaryconditions KrungsriResearch’sview Russia’smovetohaltgassupplytoEuropewillintensifytheenergycrisisinEurozonethiswinterwithlongerpricepressures,factoryshutdowns,andweakhouseholdconsumption.ElectricitywholesalepriceinEuropehadrisenbyalmost400%YoYinAugust.EventhoughtheEurozonemanagedtorefill85%ofitsgasstoragecapacitybyimportingmoreLNGfromothercountries,thatisjustenoughforthemtogetthroughthiswinter.Atfullstorage,itcanlastforaboutthreemonths. ThesurgeinunderlyingpriceshavedampenedconsumerconfidenceandretailsalessinceRussiainvadedUkraineinearly2022.Wagegrowth(+4.1%YoYinQ2/22)isexpectedtofallevenfurtherbehindQ4inflation(+9.6%YoYconsensusforecast).CompositePMIreadingsforalllargeeurozoneeconomieshavedroppedforthefifthconsecutivemonth,withGermanyregisteringthesharpestdecline. EUleaderscontinuetostruggletogetunanimoussupportforthe“gasprice-cap”plan.Germanyfearsthecapcouldcompromisesupplysecurityanddampenincentivestoreducegasconsumption.Moreover,theprice-capisdesignedtotameenergypricesinEuropeandwouldnotresolvethesupplydisruptiontriggeredbythelossofRussiangas. TheECBisstillalongwaybehindothermajorcentralbanksaseurozone’srealinterestratesremainindeepernegativeterritorythanmostcomparablecountries.Hence,weexpecttheECBtoremainaggressivewithratehikes.Weexpectas75bphikeinOctoberanda50bphikeinDecembertotakedepositrateto2.00%bytheendofthisyear. China:Challengingtoboostgrowthinafragileeconomygivenzero-Covidpolicy,weakeningeconomicdrivers,andlatesttechnologyrestrict