Moody’s unit expects regional economies to recover growth pace
Economies in the Association of Southeast Asian Nation (Asean) are seen losing momentum this year but a rebound in 2015 is expected to fuel inflation that may prompt central banks in the region to raise interest rates, Moody’s Analytics said in a new report.
From just over 5 percent, economic growth in Asean slowed to 4.3 percent in 2014.
However, in 2015, firming global demand and stronger domestic spending will lift growth back to toward trend rates, said a commentary titled “Asean Outlook: Returning to Trend,” just released by Moody’s Analytics, which is a division of Moody’s Corporation engaged in economic research and analysis.
The report did not give specific forecast figures.
“Export earnings are projected to improve over the next 18 months in line with firming global demand. The US economy is on a sustained upward trend and the Chinese economy is responding positively to the government’s stimulus,” it only said.
Moody’s Analytics noted that stronger economic growth over the next 18 months will absorb excess capacity, boosting inflation and resulting in tighter monetary policy settings in the Philippines as well as other economies such as Indonesia, Malaysia, Singapore, Thailand.
“Central banks in the five Asean countries are expected to lift rates at varying speeds as their economies recover at different rates through the cyclical upswing,” it said.
At the same time, Moody’s Analytics said Asean nations are well positioned to deal with capital outflows as global investors reposition their portfolios away from riskier markets in response to tighter US monetary policy.
“Underlying metrics across most economies remain solid: The economic outlook is robust, governments have ample foreign reserves, external positions are healthy, and the public debt burden remains manageable,” it said.
Without giving specific figures, the report noted the way the Philippine economy has shrugged off the effects of last year’s supertyphoon and became one of the strongest performers in Asean in the first half – a trend which it said is expected to continue this year and in 2015.