Economic growth in Asean is expected to slow to 5 per cent in 2019, after an estimated 5.3 per cent in 2018, according to the latest ICAEW report “Economic insight: South-east Asia”.
This comes as the US-China trade conflict and the subsequent slowdown in China are expected to “weigh significantly” on Asean growth, in particular for export-dependent economies with a high level of exports to China such as Singapore and Malaysia.
As many of the Asean economies are small and open, economic growth in the region is expected to ease due to both supply-chain linkages as well as tightening Chinese domestic demand.
Among the Asean economies, Singapore is expected to be the hardest hit, with the country’s growth set to moderate from an expected 3.3 per cent in 2018 to 2.5 per cent in 2019, according to the report.
Indonesia and the Philippines will be the least affected. But while growth is set to ease in Vietnam, Indonesia and the Philippines in 2019, they will still be among the top ten fastest growing economies globally, said ICAEW.
However, domestic demand is likely provide some relief amid a more difficult outlook for exports. Expansionary fiscal policy will help, with fiscal spending expected to be strong in Indonesia, Thailand and the Philippines ahead of upcoming elections in the first half of 2019, said the report.
However, domestic demand growth is unlikely to reach the stellar pace achieved in 2018, in part because of lower monetary policy support, it added.