ASEAN growth has slowed, but recovery seen until next year

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Singapore portThe Asian Development Bank (ADB) in its newly released Asian Development Outlook 2016 notes that growth in Southeast Asia has slowed, mainly due to the softening economic growth in China, but is seen reversing this year and in the coming year.

Overall, the ADB says that growth in entire developing Asia is forecast to dip slightly, with growth in the industrial economies unlikely to pick up this year. China continues to shift away from its reliance on investment and exports, and strong public investment has boosted growth in India despite weak exports. Low commodity prices are weighing on growth prospects in Central Asia and the Pacific.

However, most Asian economies are benefiting from low international food and fuel prices, while the regional current account surplus will narrow this year and next. Risks to the regional growth forecast remain tilted to the downside.

In ASEAN, growth slowed in seven of the ten ASEAN economies in 2015, the ADB said, edging down the sub-regional average to 4.4 per cent in 2015. In Indonesia, growth moderated for a fourth year in a row. In Malaysia, soft global demand and low oil prices cut growth by a full percentage point. Thailand’s recovery from a slump in 2014 was sluggish, while bad weather hurt agriculture in many economies.

In contrast, foreign direct investment in manufacturing and robust construction propelled Vietnam to its strongest expansion in seven years.

Aggregate growth in ASEAN is forecast to pick up to 4.5 per cent in 2016 and 4.8 per cent in 2017. Infrastructure investment is seen boosting growth in Indonesia, while Myanmar rebounds from devastating floods in 2015. Malaysia, on the other hand, faces another year of decelerating growth.

Southeast Asia’s aggregate inflation rate eased to 2.7 per cent in 2015 in line with lower food and fuel prices. Inflation is forecast to edge higher in most economies this year and next, but decelerating inflation in Indonesia will hold the ASEAN average to 2.6 per cent  in 2016 and 2.9 per cent in 2017, the ADB says.

Economic forecasts for Southeast Asian countries

Country 2016 2017
Brunei 1.0 2.5
Cambodia 7.0 7.1
Indonesia 5.2 5.5
Laos 6.8 7.0
Malaysia 4.2 4.4
Myanmar 8.4 8.3
Philippines 6.0 6.1
Singapore 2.0 2.2
Thailand 3.0 3.5
Vietnam 6.7 6.5
Average 4.5 4.8

Source: Asian Development Outlook 2016

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Reading Time: 2 minutes

The Asian Development Bank (ADB) in its newly released Asian Development Outlook 2016 notes that growth in Southeast Asia has slowed, mainly due to the softening economic growth in China, but is seen reversing this year and in the coming year.

Reading Time: 2 minutes

Singapore portThe Asian Development Bank (ADB) in its newly released Asian Development Outlook 2016 notes that growth in Southeast Asia has slowed, mainly due to the softening economic growth in China, but is seen reversing this year and in the coming year.

Overall, the ADB says that growth in entire developing Asia is forecast to dip slightly, with growth in the industrial economies unlikely to pick up this year. China continues to shift away from its reliance on investment and exports, and strong public investment has boosted growth in India despite weak exports. Low commodity prices are weighing on growth prospects in Central Asia and the Pacific.

However, most Asian economies are benefiting from low international food and fuel prices, while the regional current account surplus will narrow this year and next. Risks to the regional growth forecast remain tilted to the downside.

In ASEAN, growth slowed in seven of the ten ASEAN economies in 2015, the ADB said, edging down the sub-regional average to 4.4 per cent in 2015. In Indonesia, growth moderated for a fourth year in a row. In Malaysia, soft global demand and low oil prices cut growth by a full percentage point. Thailand’s recovery from a slump in 2014 was sluggish, while bad weather hurt agriculture in many economies.

In contrast, foreign direct investment in manufacturing and robust construction propelled Vietnam to its strongest expansion in seven years.

Aggregate growth in ASEAN is forecast to pick up to 4.5 per cent in 2016 and 4.8 per cent in 2017. Infrastructure investment is seen boosting growth in Indonesia, while Myanmar rebounds from devastating floods in 2015. Malaysia, on the other hand, faces another year of decelerating growth.

Southeast Asia’s aggregate inflation rate eased to 2.7 per cent in 2015 in line with lower food and fuel prices. Inflation is forecast to edge higher in most economies this year and next, but decelerating inflation in Indonesia will hold the ASEAN average to 2.6 per cent  in 2016 and 2.9 per cent in 2017, the ADB says.

Economic forecasts for Southeast Asian countries

Country 2016 2017
Brunei 1.0 2.5
Cambodia 7.0 7.1
Indonesia 5.2 5.5
Laos 6.8 7.0
Malaysia 4.2 4.4
Myanmar 8.4 8.3
Philippines 6.0 6.1
Singapore 2.0 2.2
Thailand 3.0 3.5
Vietnam 6.7 6.5
Average 4.5 4.8

Source: Asian Development Outlook 2016

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