British advisory firm Oxford Economics has analyzed that Southeast Asia GDP growth is less than last year’s. In 2018, the GDP was 5.1%, while it eases to 4.5% in 2019.
The firm has recently released a report on the slowdown of Southeast Asia GDP. Accordingly, the report incorporates a quarterly review focusing on Indonesia, Malaysia, the Philippines, Singapore, Thailand and Vietnam.
The report, commissioned by the Institute of Chartered Accountants in England and Wales (ICAEW), discloses that the countries have GDP growth below potential. In short, Indonesia, the Philippines, and Thailand experience GDP growth below potential, while Singapore takes the hardest.
One of the leading, arguably the most notable, factors is the continuously escalating US-China trade war. Uncertain global economic conditions and difficulties to trade with China have jeopardized the region.
Trade-dependent countries such as Singapore, Thailand, and the Philippines feel the considerable deceleration. Meanwhile, Malaysia and Vietnam, at the very least, perform better in dealing with the deceleration.
“Amid ongoing global headwinds and uncertainty around the outcome of US-China trade talks, we expect to see a further deterioration in economic prospects across the region,” said Sian Fenner, ICAEW economic advisor and Oxford Economics lead Asia economist.
Also Read: Economy is Skydiving, Thailand is Suffering
Dealing with the Situations
In order to deal with the situations, central banks in Southeast Asia are expected to reduce interest rates. This is so in order to boost domestic demands to combat inflation and uncertain global trades.
In Q4 2019, Indonesian and Philippine central banks will most likely cut interest rates once more. The expectation remains still although each has cut their interest rates by 50 basis points respectively so far.
Additionally, Malaysia is predictably about to lower its rates by 25 basis points by early 2020 at the very least. Identical to Malaysia, Thailand will probably do the same even though the country also has another strategy to deal with the situation.
Monetary Authority of Singapore is predicted to ease policy by October to deal with the matter. On the other hand, Myanmar will most likely experience better GDP growth than the preceding countries.
In contrast, Vietnam is currently outperforming the others. However, that might drastically change if the US imposes higher import tariffs to Vietnam.
