The growth forecast for Southeast Asia is retained at 5.1% for 2018, assuming robust consumption and infrastructure investment, but some downside risks for individual economies have intensified, says a report from the Asian Development Bank (ADB).
In a supplement to its Asian Development Outlook (ADO) 2018 Update report, the ADB said the pace of growth in Southeast Asia has been maintained at 5.1% for this year, but “adjustments for Indonesia, Malaysia, and Thailand lower the 2019 outlook by 0.1 percentage points to 5.1%.”
The report added that domestic demand continued to drive growth in the subregion.
Infrastructure spending remained strong in Brunei, Indonesia, the Philippines, and Thailand but declined in Malaysia.
“Consumption was buoyant despite rising food and transport prices in some economies,” the report said.
“Moderation in global demand for exports is, however, dampening growth prospects for the subregion, and particularly for Malaysia and Thailand, in 2018 and 2019,” the report said.
On the production side, the report said Myanmar and Thailand benefitted from improved agricultural output, which languished in Indonesia, Laos, and the Philippines in the wake of natural disasters and bad weather.
Moreover, the report said manufacturing in Malaysia and Thailand was undercut by weaker demand from trade partners, but expanded in Cambodia and Vietnam.
Meanwhile, it said lower tourist arrivals dragged on service growth in Myanmar and Thailand.
The report maintained its growth forecast for Indonesia for 2018 at 5.1%. However, it said the growth forecast for 2019 was downgraded slightly from 5.3% to 5.2%.
The report also made downward revisions to Malaysia’s GDP growth forecast for 2018 from 5.0% to 4.7%. “Domestic and external factors similarly prompt a slight downgrade to the 2019 growth forecast from 4.8 percent to 4.7 percent,” the report stated.
For the Philippines, GDP growth is seen accelerating through 2019, supported by robust public and private investment. Growth forecasts are maintained at 6.4% for 2018 and 6.7% for 2019.
Thailand’s growth forecast for 2018 is also adjusted down from 4.5% in the update report to 4.3% as economic growth in the third quarter slowed to 3.3% from a strong 4.6% in the second quarter. The growth forecast for 2019 is likewise pared to 4.1% in response to a weaker global environment even as domestic demand is expected to remain robust.
Vietnam saw GDP growth in the first three quarters of 2018 reach 7.0%, improving on 6.4% a year earlier. Growth was propelled by solid performances in agriculture, industry, and services. Growth projections for Vietnam are unchanged at 6.9% for 2018 and 6.8% for 2019.
ADO is ADB’s flagship annual economic publication. The publication provides a comprehensive analysis of macroeconomic issues in developing Asia, including growth projections for major economies.
Photo: Roy Kim