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The ICAEW Economic Update: Southeast Asia


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Tue, 19 Mar. 2019

The ICAEW Economic Update: South East Asia, is a quarterly forecast for the region prepared directly for the finance profession.

Q1 2019 Summary – External headwinds but a slowdown in trade not as bad as 2015/16

  • The ICAEW forecast GDP in the Southeast Asia region to slow to 4.8% this year from 5.1% in 2018, as export growth moderates amid increased trade protectionism and slower Chinese import demand.
  • But with China’s growth to find a floor by Q2 and domestic demand to remain resilient aided by accommodative macro policies, most do not expect the slowdown in growth to become as worrisome as 2015/16.
  • The ICAEW expect fiscal spending to be strong in Indonesia, Thailand and the Philippines ahead of upcoming elections in H1 2019 and see few political risks for Indonesia with Jokowi expected to remain in power. However, there is a risk that the absence of a clear majority by the pro-junta Palang Phracharat party leads to protests in Thailand, disrupting economic activity.
  • The risks to the Southeast Asia economic outlook are primarily to the downside. A sharper slowdown in Chinese economic growth triggered by worsening confidence or a renewed escalation in US-China trade tensions would all weigh on global trade and growth across the region.

Downside pressures to abate going forward

The year has undeniably started on a soft note, in and outside of Asia. Bottom-up data indicate that the late 2018 weakness in global economic activity has spilt over into 2019. And with China slowing below trend, the rest of Asia has expectedly not fared well.

Indeed, regional merchandise exports growth in US$ terms tumbled in December, contracting 2.3% on the year, following a weak outcome (2.2%) in November. The deterioration in export momentum was broad-based, with only Malaysia recording positive annual growth, although this follows some normalisation in mining production following earlier supply disruptions. And while Singapore and China data showed some improvement in exports in January, the data is likely to be volatile in Q1 given the shifting timing of Chinese New Year.

To read the full article from the ICAEW, please click the link below.

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Full report:

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