The Asian Development Bank (ADB) is forecasting that economies of Southeast Asia would grow by 5.2 percent on the back of the strong growth of the Philippines and rebound of the Thailand economy.
From a modest growth rate of 4.6 percent in 2011, Southeast Asian economies will surge by 5.2 percent this year and an even stronger 5.6 percent next year, the ADB projects.
The ADB said in its new Asian Economic Integration Monitor (AEM) that strong domestic demand and private investment helped drive Southeast Asian growth in the first half. The region’s economies expanded 4.3 percent in the first quarter after a weak 2.9 percent performance in the last quarter of 2011.
The Asian Economic Integration Monitor is a semi-annual review of Asia’s regional economic cooperation and integration. It covers 48 regional member countries.
“The improvement was due mainly to the strong rebound in Thailand’s growth after the disruptions from last year’s floods – and strong Philippine growth,” the AEM noted.
Singapore and Malaysia posted slower growth in the first quarter, while Vietnam’s first-half growth came in lower than expected due to domestic policy tightening and weakness in the banking sector.
The ADB said that the weak external environment would likely contribute to slower export growth, hurting the more export-dependent economies in the region. Both export growth and industrial production is trending down.
“However, private consumption remains strong, helping sustain the robust growth outlook for the region. Retail sales have been picking up and consumer confidence has remained strong, particularly in Indonesia and the Philippines,” it said.
The region’s growth will also get a boost from Thailand’s continued rapid recovery with the government expected to spend B480 billion (4.2 percent of gross domestic product or GDP) for flood-relief and reconstruction. Most governments also retain sufficient policy space to ease monetary policy and provide fiscal stimulus if needed.
Overall, developing Asia, which grew by 7.2 percent last year, would experience slower growth of 6.6 percent this year, but nearly return to its previous rate of 7.1 percent in 2013.
After a more robust eight percent growth rate in 2011, East Asia is forecast to slow down to 7.1 percent this year and slightly pick up to 7.5 percent in 2013. China particularly will see a slowdown in economic growth of 8.2 percent this year from 9.2 percent in 2011, and 8.5 percent in 2013.
The major developed nations will, however, continue to grope for growth. The United States is forecast to inch up to a rate of 1.9-percent this year from 1.7 percent and pick up somewhat to 2.2 percent by next year.
From a positive 1.5-percent growth rate, the eurozone will shrink by (-) 0.7 percent this year but return to the positive zone of 0.8 percent in 2013.
Source: Philippine Star | July 20, 2012