ASEAN-5 likely to lead “a relatively fragile recovery” in 2020: Nomura

ASEAN is likely to see a gradual rather than V-shaped recovery in 2020, amid global economic uncertainty.
DECEMBER 10, 2019 - 5:25 PM

ASEAN is likely to see a gradual rather than V-shaped recovery in 2020, with the five largest Asean economies expected to clock gross domestic product (GDP) growth of 4.5 per cent in 2020, picking up after having previously slowed to 4.3 per cent in 2019 from 4.9 per cent in 2018, according to Nomura Global Market Research’s Asia 2020 outlook, which covered nine major Asian economies.

Of the Asean-5 economies, the report went into detail about all of them except Malaysia.


The report expects Indonesian GDP to grow by 5.1 per cent in 2020, a marginal improvement from Nomura’s forecast of 5 per cent in 2019 but below the government's target of 5.3 per cent.

Reforms to boost investment and create jobs may be delayed, as the relevant legislation is taking the form of an omnibus code. Despite sizeable space, the Indonesian government has a relatively tight fiscal policy as it budgets a smaller fiscal deficit in 2020 due to too much fiscal conservatism, according to Nomura. 

The Philippines

In contrast to the rest of the region, the Philippines is expected to see a sharp recovery, with GDP growth of 6.7 per cent in 2020, above the consensus forecast of 6.1 per cent.

Domestic demand will be able to offset the weak export demand, which is expected to remain subdued. The economy is starting to reap benefits of past reforms such as the Ease of Doing Business Act; private consumption will remain supported by tighter labour markets and higher disposable incomes after tax reforms; and public investment will stay strong, crowding-in private investment too.


Singapore’s economic recovery will likely be underwhelming given a relatively weak recovery in the export sector, due to tepid external demand amid global trade uncertainties. 

Notwithstanding, an expansionary fiscal policy should help to offset some of the distress on the Republic’s economy. Nomura expects Budget 2020 to be announced ahead of the general election, which it believes to be in late 2020. 

The report lowered Singapore’s 2020 GDP growth forecast to 1.3 per cent from 1.8 per cent, below the consensus forecast of 1.4 per cent and the midpoint of the Ministry of Trade and Industry’s 0.5-2.5 per cent forecast range.


Thailand’s GDP is expected to grow by 2.7 per cent in 2020, below the consensus forecast of 3.0 per cent, suggesting that the country will have a gradual U-shaped recovery rather than a significant pickup soon. 

The export downturn has had negative spillover effects on domestic demand, via worsening labour market conditions, said Nomura. This has also come at a time when fiscal policy is constrained by the delay in the budget bill.