Here's what the ADB predicts for Asean's economies in 2018 and 2019

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APRIL 12, 2018 - 1:56 AM

The Asian Development Bank has published its annual Asian Development Outlook report, and along with it, forecasts for the various Asian economies. 

It seems fairly optimistic about where the Southeast Asian economies are headed. Here are four key points from its report on Asean's growth and inflation outlook.

1. Southeast Asia is poised to sustain a higher growth path.

Growth accelerated to 5.2 per cent last year, half a percentage point higher than in 2016. This was underpinned by a turnaround in exports and robust domestic demand across Asean).

2. Why? Export growth will ease, but stronger domestic demand ought to make up for it.

After last year's rebound, exports, particularly technology ones, likely won't grow as much. But, a recovery in global commodity prices should support exporters of primary goods. with ambitious public infrastructure spending, solid foreign direct investment and robust household consumption, domestic demand should rise. So overall, Southeast Asia's average annual growth should hold up at 5.2 per cent this year, and next.

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3. Not an even picture across the 10 Asean economies.

For 8 of the 10 economies, growth this year is forecast to meet or exceed 2017's rate. Malaysia and Singapore are the likely exceptions. ADB sees these two economies unwinding from last year’s rapid expansion toward their long-term potential growth rates this year.  As for Indonesia, the Philippines, and Thailand, ADB believes growth for these three will accelerate thanks to strong investment and domestic consumption. Vietnam is also expected to benefit from the continued expansion of its industrial base. 

4. Inflation stabilises

Inflation edged up 0.7 percentage points to 2.8 per cent in 2017. ADB expects that it will stabilise at 3 per cent this year and next. Reasons? Apart from strong domestic demand, price increases are likely to be fueled by higher minimum wages, administered prices and rising oil prices globally. Only Malaysia, whose transport costs spiked in 2017 after changes were made to the price-setting mechanism for fuel and lubricants, is likely to see inflation cool in both 2018 and 2019.

And here are the ADB's 2018 and 2019 forecasts for each of the 10 markets, as well as the Asean region as a whole: