Growth slowed down for most economies in Southeast Asia due to weaker export demand, says the Asian Development Bank (ADB). The Asian Development Outlook (ADO) September 2023 revised its growth outlook for the region to 4.6% this year from an earlier projection of 4.7% and to 4.8% in 2024 from 5.0%.
The 2023 forecast for Asia and the Pacific was also downgraded to 4.7% from 4.8% amid rising risks, but the projection for 2024 was maintained at 4.8%.
“Developing Asia continues growing robustly, and inflation pressures are receding,” said ADB Chief Economist Albert Park. “Some central banks in the region have started to lower interest rates, which will help boost growth. Still, governments need to be vigilant against the many risks that the region faces. Property market weakness in the PRC remains a concern. Extreme weather events due to climate change and the effects of El Niño remind us that economies must work together to build resilience and protect the most vulnerable.”
The main reasons behind the deceleration in Southeast Asia were “slowing global growth, high commodity prices, and tightened global financial conditions,” says the report. There was weaker demand for the region’s manufactured goods and commodities from key trade partners, including the People’s Republic of China. The agriculture sector also produced lower yields due to bad weather.
Consumer spending drove growth in the first half of the year, while the recovery in tourism and other services provided better jobs and income.
BIMP-EAGA countries continued to post a solid recovery.
ADB upgraded its forecast for Brunei Darussalam to 2.8% this year and cut the projection for 2024 slightly to 2.5%. Growth drivers are private consumption and increased investment and trade.
This year’s growth outlook for Indonesia was raised to 5.0% while the forecast for 2024 was kept at 5.0%. The report expects strong demand from the country’s large domestic economy to “more than offset slowing goods exports.”
Malaysia is forecast to grow slower this year at 4.5%. The projection for 2024 was also maintained at 4.9%. Strong domestic demand and the uptrend in tourism are seen to continue. However, growth in exports of commodities and manufacturing goods is being held back by weak external demand.
Economic growth in the Philippines is expected to moderate this year due to inflation and global headwinds before picking up in 2024 as price pressures ease, says the report. It forecasts the economy to grow by 5.7% this year compared with the 6.0% projection in the April report. The 2024 forecast is maintained at 6.2%, with household consumption and public spending on infrastructure and social services seen contributing to the economy’s expansion.