5 worst possible scenarios (2022)
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The document outlines 5 worst possible economic scenarios for 2022 and beyond, compared to a baseline scenario of continued global economic recovery. The 5 scenarios are: 1) emergence of deadlier COVID-19 strains, 2) a severe "taper tantrum" as central banks reduce stimulus, 3) a new economic crisis down the road triggered by asset bubbles, 4) an economic crisis in China from its large real estate sector, and 5) rising geopolitical tensions and trade wars between the US and China. For each scenario, the document discusses potential impacts and recommendations for how countries can prepare and overcome the challenges.
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5 worst possible scenarios (2022)
- 1. 1 5 Worst Possible Economic Scenarios in 2022 and Beyond How to Overcome/Avoid Kobsak Pootrakool 8 December 2021
- 2. 2 Topics for Discussion โข Baseline scenario โข 5 worst possible scenarios for 2022 and beyond
- 3. 3 5 Deviations from Baseline Baseline
- 5. 5 As we approach end of the second year of Covid-19 pandemic, light at the end of tunnel becomes brighter, giving us great optimism of new beginning
- 6. 6
- 7. 7 As we are getting ready to restart, we have to ask the following key questions 2022 2023 2024 How will the world economy adjust over the next 3 years? What are the implications to our businesses? What are the required preparation for the new normal?
- 8. 8 2022 will be the key turning point.
- 9. 9 Good progress has been made around the world, regarding vaccination Sources:NYT
- 10. 10 Vaccination Progress around the World Sources:NYT
- 11. 11 Recent Cases in Singapore (90% Vaccine Coverage) Sources:MOHSGโ21NOV2021
- 12. 12 Example from Israel โ Importance of the Third Dose Sources:NYTandWorldometer.com Share of Population Vaccinated
- 13. 13 In addition, as time passes by, new medical innovations start to emerge.
- 14. 14 Global Economic Recovery and its Short-term Challenges
- 15. 15 The Latest Global Economic Forecast by the IMF (October 2021) Average World GDP Growth
- 16. 16 Projected above-trend growth for 2 years in most regions for 2021-2022 Sources:IMF
- 17. 17 This is due to Post Pandemic Boom
- 18. 18 Post Pandemic Boom in the Past Sources:TheEconomist
- 19. 19 Short-term Challenges โข Global Supply Shortages โข Commodity Price Surges โข Inflation Spike โข Asset Price Bubbles โข Fed Tapering
- 20. 20 Temporary Surge in the Global Manufacturing PMI Sources:IMF
- 21. 21 Supply Chain Disruption and Commodity Prices Surges Sources:IMF
- 24. 24 When to act, that is the question.
- 25. 25 US Labor Market USEmployment USUnemployment Rate Sources:tradingeconomics.com
- 26. 26 US FOMC (Dot Plot from September Meeting) Sources:FED
- 27. 27 Housing Prices in the US
- 28. 28 Stock Prices Dow Jones Index Nasdaq Index
- 30. 30 Central Banksโ Balance Sheets Fed ECB
- 31. 31 Maybe we need take neccesary actions earlier +2% in 2 Years Sources:FED
- 32. 32 Hungary Benchmark Rate Countries that already raised policy rates Czech Rep Poland Romania Sources:tradingeconomics
- 33. 33 Consequences of Tapering : Rise in the 10Y Yields
- 34. 34 Consequences of Tapering : Rise in the 10Y Yields
- 35. 35 Consequences of Tapering : US Dollar Sources:Finviz.com
- 36. 36 Looking Forward to the Next 3 Years (2022-2024) 2022 2023 2024 High coverage of vaccination for Thailand FedTapering Return of Int. Tourists Rise of World Interest Rates Rise of Local Interest Rates Supply Chain Relocation Restart Continued Global Expansion at More Moderate Pace Intense Competition Cleaning up of Economic Scars
- 37. 37 5 Worst Possible Scenarios for 2022 and Beyond
- 38. 38 5 Deviations from Baseline Baseline 1 2 3 4 5
- 39. 39 Scenario 1 - Emergence of Deadlier Covid-19 Strains
- 40. 40 New Cases of Covid-19 Sources:Worldometer.com
- 41. 41 New Cases of Covid-19 in the EU areas Pandemic of the Unvaccinated Sources:NYT
- 43. 43 Omicron in South Africa Sources:Worldometer.com
- 44. 44 Still someway to go
- 45. 45 How to Overcome/Avoid โข Vaccinate the rest of the population โข Continue with the 3rd dose โข Stockpile extra vaccines in case of emergency โข Develop our own vaccines โข Manage the consequences on the economy as we race to develop new vaccines
- 46. 46 Vaccination Rollout Progress in Thailand 31Aug21 30Sept 21 31Oct21 30Nov21 31Dec21 32.6M 95.9M 53.7M 75.7M 93.2M +21.1 +22.0 +17.5 +10-12 103-105M By end-2021 We shouldbe able to coveraround51M people or 76%. When we include another 9M of 0-12 yearsold, it meansthat around 90% will havenatural or induced immunities by yearend.
- 47. 47 Vaccination Rollout Progress in Thailand
- 48. 48 Scenario 2 - Severe Taper Tantrum
- 50. 50 US Labor Market USEmployment USUnemployment Rate Sources:tradingeconomics.com
- 53. 53 โA stronger dose of medicineโ leads to greater global volatilities Sources:FED
- 54. 54 Comparing FOMCโs Dot Plots Sept 2021 Sept 2020 Sources:FED
- 55. 55 Fed Fund Rate
- 56. 56 Fed Fund Rate
- 57. 57 Consequences of Tapering : Rise in the 10Y Yields
- 58. 58 Consequences of Tapering : US Dollar Sources:Finviz.com
- 59. 59 Crises in Emerging Countries Sources:IMF
- 60. 60 Crises in Emerging Countries
- 61. 61 Turkish Lira
- 65. 65 How to Overcome/Avoid โข Keep our balance sheet sound โข Do not over-extended our operations โข Differentiate Thailand from the rest of EMs โข Prepare to withstand the impacts for 1-2 years
- 66. 66 SET Index
- 67. 67 Scenario 3 - New Economic Crisis down the Road
- 68. 68 Housing Prices in the US
- 69. 69 Asset Prices in the Stock Exchanges Dow Jones Index Nasdaq Index
- 71. 71 Central Banksโ Balance Sheet Fed ECB
- 72. 72 Dot-Com Crisis +2% in 2 Years
- 73. 73 Subprime Crisis +2% in 2 Years
- 74. 74 How to Overcome/Avoid โข Readjust our portfolio from high-risk assets โข Keep our balance sheet sound โข Do not over-extended our operations โข Prepare to withstand the impact for 1-2 years of high volatilities and 5 years of subdued economies
- 75. 75 Scenario 4 - Possible Economic Crisis in China
- 76. 76 Evergrande Group 350 Billion USD Sources:CaixinGlobal
- 77. 77 Size of Chinese Real Estate Sector Sources:BusinessInsider
- 78. 78 Size of Chinese Real Estate Sector
- 79. 79 Size of Chinese Real Estate Sector Sources:Bloomberg
- 81. 81 Over the past 2 years, the house price increase has moderated But the housing bubble is already formed!!!
- 82. 82 How to Overcome/Avoid โข This will be a problem of a specific country โข Severity of the crisis will depend on policy choices โข Given the importance of China in the Asian markets, the impact will be substantial and will require time to work out at least 5 years โข Need to keep our balance sheet sound โข Looking for alternative markets outside China โข Preparing for competition on the raw materials and other consumer products โข Finding investment opportunities in China
- 83. 83 Scenario 5 - Rising Tension from US-China Trade War
- 84. 84 Episode II of the Trade War between China and US Sources:CGTN
- 85. 85 True Causes of Deep Conflict Share of World GDP (PPP Basis) Sources:IMF.com Sources:CNBC.com 10% 75% GDP (USD Basis)
- 86. 86 True Causes of Deep Conflict Relocation out of China will continue
- 87. 87 Asian Century : It is our Turn to be on the Stage Share of Asia 1700 โ58% 1870 โ35% 1950 โ15% 2000โ22% 2020 โ33% 2050 โ53% Sources:bloomberg.com
- 88. 88 Driven by Increasing Connectivity in Asia Sources:researchgate.net
- 89. 89 Road Networks in China 160,000 km Sources:roadtraffic-technology.com
- 90. 90 Most of which were Built during the Past 20 Years Sources:ceicdata.com
- 91. 91 91 Roads and Motorways Improves quite Rapidly around Thailand Sources:BOI
- 92. 92 92 Example from the US Take-off of American Industrialization During that Time Sources:wikipedia.com
- 93. 93 Competition for Asia Hegemony
- 94. 94 The Coming Rise of ASEAN
- 95. 95 ASEAN at the Crossroad
- 97. 97 97 Opportunities in the region
- 98. 98 How to Overcome/Avoid โข Preparing for trade conflicts and trade diversion โข Volatilities in financial markets โข Subpar growth performance โข Relocation of Business from China โข Rise of ASEAN and FDI into ASEAN
- 99. 99 99 New CBDs in Bangkok
- 100. 100 100 Complete Subway System in Bangkok
- 101. 101 Conclusion
- 102. 102 5 Deviations from Baseline Baseline 1 2 3 4 5
- 103. 103 Preparing for the New Competition
- 104. 104 Whether we will be successful in the post covid-era, will depend on how well we prepare ourselves and take advantage of opportunities as countries re-open.
- 105. 105 Emerging Opportunities to Capture before the End of the Crisis โข Fast Pace of Digitization Adoption โข Chances for Renovation and Preparation for Future Businesses โข Asset acquisition โข Temporary Low Cost of Funding โข Relocation of Manufacturing and HQ โข Regionalization
- 106. 106 Q & A