The growth of the five largest economies in the Association of Southeast Asian Nations, or Asean-5, will continue to be solid this year, according to a new Asian Development Bank outlook.
Released on Tuesday, the latest edition of Asian Development Outlook (ADO) supplement said that the five largest economies in Asean such as the Philippines, Indonesia, Malaysia, Thailand and Vietnam are seen to grow at 5.2 percent this year. It added that Asean-5 will further expand by 5.6 percent in 2014.
Meanwhile, the report trimmed down the growth outlook for the whole of Southeast Asia this year, from 5.4 percent to 5.2 percent.
It also cut the forecast for the region for 2014 from 5.7 percent to 5.6 percent.
The ADO explained that the trimming down of its growth projection for the region can be attributed to the softer outlook for China, which is seen to grow at 7.7 percent in 2013 and 7.5 percent in 2014.
“Capital outflows from the subregion have fueled stock market volatility, but the real sector has so far been largely unaffected,” it stated.
However, the report lauded the region’s generally solid growth in the first quarter of 2013, citing the Philippine’s robust growth in the same period.
“The Philippines achieved stronger-than-expected GDP [gross domestic product]growth of 7.8 percent year-on-year, as domestic demand was buoyed by accelerated public and private investment and stable remittance inflows,” it said.
The ADO also noted that Indonesia’s domestic demand continues to be strong, driven by private consumption and private and public investment, with GDP growing by 6 percent year-on-year.
It added that Thailand’s economic growth moderated to 5.3 percent year-on-year in the first quarter, coming off a rapid 2012 pace that largely reflected recovery from floods in 2011.
Meanwhile, the ADB outlook also mentioned Malaysia’s economic growth slowed on weaker external demand and moderating domestic demand.
“The rest of the subregion is holding up relatively well, except that Singapore’s open economy grew by only 0.2 percent year-on-year in the first quarter of 2013,” it said.
On the other hand, ADO also trimmed the 2013 growth forecast for the 45 developing member-countries of ADB to 6.3 percent, and cut its 2014 forecast to 6.4 percent.
In April, ADB predicted the region to grow 6.6 percent this year and 6.7 percent next year.
“The drop in trade and scaling back of investment are part of a more balanced growth path for PRC [People’s Republic of China], and the knock-on effect of its slower pace is definitely a concern for the region. But we are also seeing more subdued activity across much of developing Asia,” said ADB Chief Economist Changyong Rhee.