Growth remains strong across most of developing Asia but is set to moderate this year and next year against the backdrop of slowing global demand and persistent trade tensions, according to a new Asian Development Bank (ADB) report.
The latest Asian Development Outlook (ADO) 2019, ADB’s flagship economic publication, forecasts that growth in the region will soften to 5.7% in 2019 and 5.6% in 2020.
Southeast Asia is projected to grow 4.9% this year, slower than December’s 5.1% forecast, and 5% in 2020.
Southeast Asia holds steady with some growth moderation. Subregional growth was marginally lower at 5.1% last year as strong domestic demand countered slowing exports.
With weakening global growth, slowing trade, and softer commodity prices, export prospects dim further for these highly trade-engaged economies. Continued strength in domestic demand should nevertheless support growth at 4.9% this year and 5.0% next year.
In half of the 10 subregional economies, growth is forecast to slow this year, while Indonesia and the Lao People’s Democratic Republic will be unchanged, and Brunei Darussalam, Myanmar, and the Philippines will post higher growth.
Strong consumption, spurred by rising incomes, stable inflation, and robust remittances is underpinning growth in Indonesia, Malaysia, the Philippines, Singapore, and Thailand, as is foreign investment in Cambodia and Viet Nam, and large infrastructure projects elsewhere.
Inflation in the subregion will dip marginally this year before returning to last year’s 2.7%, broadly held in check by slowing growth and lower international oil prices, even as some countries hike administered prices.
Growth in the region will soften to 5.7% in 2019 and 5.6% in 2020.
Developing Asia’s growth in 2018 was 5.9%. Excluding the newly industrialized economies of Hong Kong, China; Republic of Korea; Singapore; and Taipei,China, developing Asia is forecast to expand 6.2% in 2019 and a slightly slower 6.1% in 2020. In 2018, growth was 6.4%.
“Growth overall remains solid with domestic consumption strong or expanding in most economies around the region. This is softening the impact of slowing exports. Uncertainty clouding the outlook remains elevated.”
ADB Chief Economist Mr. Yasuyuki Sawada
Growth in developing Asia is projected to soften to 5.7% in 2019 and 5.6% in 2020. Excluding Asia’s high-income newly industrialized economies, growth is expected to slip from 6.4% in 2018 to 6.2% in 2019 and 6.1% in 2020.
As oil prices rose and Asian currencies depreciated, inflation edged up last year but remained low by historical standards. In light of stable commodity prices, inflation is anticipated to remain subdued at 2.5% in both 2019 and 2020.
Risks remain tilted to the downside
Inflation remains low. Stable food and fuel prices mean headline inflation will be steady at 2.5% in both 2019 and 2020, the report says.
Trade conflict between the United States (US) and the People’s Republic of China (PRC) is still the primary risk to the region’s economic outlook with protracted negotiations propelling further global trade uncertainty. Other risks are a potentially rapid slowdown in advanced economies and the PRC, as well as financial volatility.
ADB forecasts slower combined growth in the US, the European Union (EU), and Japanese economies of 1.9% this year and 1.6% in 2020 given tighter fiscal and monetary conditions in the US, the prospects of a disorderly United Kingdom exit from the EU, and the US–PRC trade conflict.
In the PRC, structural changes in the economy away from industry and towards services and financial tightening as the government seeks to control financial risks will likely see economic growth moderate to 6.3% in 2019 and 6.1% in 2020 from 6.6% in 2018. Slower growth is to be expected as the PRC economy matures.
By contrast, stronger consumption will see growth in India tick up from 7.0% in 2018 to 7.2% in 2019 and 7.3% in 2020 with lower policy interest rates and income support to farmers boosting domestic demand. South Asia overall will outperform other subregions and is forecast to expand 6.8% this year and 6.9% next year.
Growth will also rebound in the Pacific from 0.9% in 2018 to 3.5% in 2019 as liquefied natural gas production in Papua New Guinea, the subregion’s largest economy, returns to full capacity following an earthquake in 2018. Growth is expected to be 3.2% in 2020.
Lower oil prices, alongside slower growth in the Russian Federation will weigh on economies in Central Asia. Growth in the subregion is forecast to slow to 4.2% for this year and in 2020.
Thai fruit exports to FTA markets up 107 percent
China, Malaysia, Singapore, Indonesia, the Philippines, Hong Kong, Australia and Chile are top importers of Thai fruits, especially fresh durian, mangosteen, longan and mango. Thai exporters are able to benefit from FTA privileges.
BANGKOK (NNT) – Thailand’s fruit exports continue to increase, despite the sluggish global economy caused by the COVID-19 pandemic, with key trade partners being countries that have free trade agreements (FTAs) with the kingdom.
The Future of Asia: greener but with a public and private debt hangover
The COVID-19 pandemic has been a perfect storm, destroying jobs, worsening poverty and inequality, and creating a public and private debt problem—especially for countries and firms already in fragile financial health beforehand
50:50 campaign may not get immediate extension
BANGKOK (NNT) – The government’s 50:50 co-pay campaign expiring on 31st March may not be getting an immediate campaign extension. The Minister of Finance says campaign evaluation is needed to improve future campaigns.
The Minister of Finance Arkhom Termpittayapaisith today announced the government may not be able to reach a conclusion on the extension of the 50:50 co-pay campaign in time for the current 31st March campaign end date, as evaluations are needed to better improve the campaign.
Originally introduced last year, the 50:50 campaign is a financial aid campaign for people impacted by the COVID-19 pandemic, in which the government subsidizes up to half the price of purchases at participating stores, with a daily cap on the subsidy amount of 150 baht, and a 3,500 baht per person subsidy limit over the entire campaign.
The campaign has already been extended once, with the current end date set for 31st March.
The Finance Minister said that payout campaigns for the general public are still valid in this period, allowing time for the 50:50 campaign to be assessed, and to address reports of fraud at some participating stores.
The Fiscal Police Office Director General and the Ministry of Finance Spokesperson Kulaya Tantitemit, said today that a bigger quota could be offered in Phase 3 of the 50:50 campaign beyond the 15 million people enrolled in the first two phases, while existing participants will need to confirm their identity if they want to participate in Phase 3, without the need to fill out the registration form.
Mrs Kulaya said the campaign will still be funded by emergency loan credit allocated for pandemic compensation, which still has about 200 billion baht available as of today.
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