As the nation heads into the heart of Holy Week, there’s a piece of encouraging news from the Asian Development Bank that we Filipinos can take with us to our retreat, vacations, and recharging of batteries.
In a report on Southeast Asian Economies and their performance in the full year 2015, the bank says that most economies in Southeast Asia are still chugging along, performing as forecast, and collectively outperforming Europe, which is living through a time of tribulation and self-examination.
Asean is in good shape. But looking forward, the ADB says the Asean region’s economic outlook is unclear and the downside risks are multiplying.
Asean’s huge growth potential
For the full year 2015, the combined GDP of the five biggest Asean countries (Indonesia, the Philippines, Thailand, Malaysia, and Singapore) grew 4.3 percent, down 0.1 percentage-point from the previous year.
Asean’s market of 600 million consumers still has huge growth potential. Despite the global uncertainty, measures to shore up domestic demand may keep the regional economy ticking over nicely.
The ADB estimates for Indonesia, Malaysia, the Philippines, Singapore and Thailand are based on government data.
Philippines GDP growth leader
The rise in combined GDP growth for the five countries in the final quarter of 2015 is significant. Strong consumer spending, backed by fiscal and monetary stimulus, has kept many economies humming. But things look murkier down the road. China’s slowdown and falling commodity prices are among the potential pitfalls.
Philippines setting the pace
By country, the Philippines grew a robust 6.3 percent in the final quarter of 2015, beating market forecasts. Indonesia’s economy also expanded at a brisk 5-percent pace. The two most populous Asean countries led the region’s economic growth.
Incomes are rising in the Philippines, due in part to the growth of call centers and other outsourcing businesses. Consumer spending, which accounts for 70 percent of the country’s GDP, has been firm. Lower oil prices are a boon to the Philippines, which imports energy. The government has forecast continued strong growth in 2016 of around 7 percent.
Rising public spending is also giving a boost to the region’s big economies. In Indonesia, public investment in the October-December quarter rose 7.3 percent as President Joko Widodo’s ambitious infrastructure building program got rolling. Fixed capital formation, composed mostly of private-sector capital investment, climbed 6.9 percent, up from a 4.8 percent increase in the July-September quarter. Statistics Indonesia says the economy has a good chance of achieving the government’s growth target of 5.3 percent in 2016.
Thailand’s economy, powered mainly by manufacturing, was hurt by China’s slump. The growth rate fell short of 3 percent for the third straight quarter. But the vital tourist industry performed well, and there are signs of an upturn in domestic demand. The government hopes to offset declining exports with domestic stimulus focused on rural areas, where 40 percent of Thais live. On Feb. 23, the government decided on a 93 billion baht ($2.6 billion) package to support farming villages.
Less populous Singapore and Malaysia have hit a rough patch. Singapore’s export-dependent economy has taken a body blow from China’s weaker growth. Its exports to the country in January plunged 25 percent from the same month a year earlier.
Malaysia is in a more serious predicament. Many economists predict tough times ahead for the country, which is heavily dependent on exports of commodities such as crude oil and palm oil.
Malaysian companies in the country’s energy and resources sector have been battered by the collapse of oil prices. The sagging bottom lines of major state-run energy companies like Petronas mean less tax and dividend revenue for the government. That makes it harder to prop up consumer spending with fiscal stimulus.
Overall it’s a picture of positive growth for Asean.
For the Philippines in particular, the report shows that the country is still pacing the region in terms of GDP growth.
The recent rise in public spending will surely boost Philippine economic performance in 2016.
The big question mark remains the countrys’ weak manufacturing and agriculture sectors. Their growth is the key to robust job creation and the reduction of poverty levels.
We cite this report as positive news as the nation heads into the May elections.
If the balloting is honest, orderly and fair, the country will have a good chance for a smooth transition.
And a new government, if it has a sound and a credible leader, will have a fair chance of succeeding. And the Philippines will be headed to even better times.