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ADB forecasts stable outlook for Southeast Asia
10
Dec '15
The economic outlook for South Asia remains stable, according to the Asian Development Bank's Asian Development Outlook 2015 Update.

GDP growth across Southeast Asia is projected at 4.4 per cent in 2015 and 4.9 per cent in 2016, as envisaged in the Update. The growth forecast for Indonesia, the largest economy in the subregion, is trimmed slightly for 2015 and 2016 as budget disbursement has been below expectations, and as further delays in export recovery are likely. The growth forecasts for the Philippines and Singapore in 2015 are similarly trimmed to reflect lower-than-expected growth in the third quarter.

Meanwhile, the growth forecast for Myanmar in 2015 and 2016 has been revised up on expectations of higher investment and tourist arrivals.

Growth in Indonesia was stable at 4.7 per cent year on year in the third quarter, as in the second. Government spending improved significantly to grow by 6.6 per cent year on year, much higher than in the previous quarter. Expansion in fixed investment was supported in part by the start of several public projects, and household consumption remained robust. As expected, net exports continued their positive contribution to GDP growth, at 1.2 percentage points as in the first half of the year.

The rate of capital budget disbursement by the end of 2015 is projected to be slightly lower than the 80 –85 per cent assumed in the Update, curbing growth in the second half slightly more than previously expected. GDP growth in 2015 is now projected at 4.8 per cent, down from the 4.9 per cent projected in September. In 2016, growth is seen accelerating to 5.3 per cent, revised slightly down from the previous projection as export recovery is likely to be further delayed.

After growing at 5.3 per cent in the first half of 2015, the Malaysian economy expanded by 4.7 per cent in the third quarter, the slowest pace in more than 2 years. Decelerating domestic demand continued to drag down growth in the third quarter, as private consumption eased following the introduction in April of a 6 per cent tax on goods and services. Business sentiment has been hurt by lackluster prospects for exports, a sharp depreciation of the Malaysian ringgit, a slide in stock prices, and spare manufacturing capacity. On the other hand, the ringgit's depreciation supported export expansion and net exports growth at 3.3 per cent in the third quarter, reversing 10.5 per cent contraction in the second. Although the rest of the year will see private consumption buffeted by headwinds caused by sagging consumer confidence, the new tax on goods and services, slowing growth in credit to households, and signs of softening in the labor market, growth will find support in better prospects for exports. Growth forecasts are therefore maintained at 4.7 per cent for 2015 and 4.9 per cent for 2016.

 


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