Moody ‘s sees PH, along with Vietnam, Indonesia as region‘s top growth drivers
Vietnam, Indonesia and the Philippines are anticipated to be the economic drivers of growth in the Association of Southeast Asian Nations (Asean) in 2016 and 2017, Moody’s said in a report.
In an Inside Asean report forwarded to the media on Tuesday, credit rating agency Moody’s Investor Service said growth in the region is expected to be “subdued” given lower global demand affecting the export-oriented countries in the region.
“The growth prospects of Asean’s major export-orientated economies—Singapore, Malaysia and Thailand—will remain weaker than those of more domestic demand-driven economies, Indonesia and the Philippines, in 2016 and 2017,” Rahul Ghosh, Moody’s vice president and senior research analyst, said.
Moody’s also pointed to Vietnam as a regional growth outperformer toward 2017 on the back of robust manufacturing activity and strong foreign direct investment flows.
Moody’s said export growth is slumping across the region, but its economic impact will vary according to the countries’ dependence on trade, as indicated by its trade to GDP ratio.
Acc ording to the ratings agency, total trade—the sum of exports and imports— accounted for 346 percent, 131 percent and 130 percent of the GDP of Singapore, Malaysia, and Thailand, respectively.
These percentages are higher than the trade to GDP ratios of Indonesia (41 percent) and the Philippines (58 percent).
“Singapore, Malaysia, and Thailand are susceptible to a prolonged period of subdued global demand via both the export channel and weaker investment demand,” Ghosh said.
“We forecast G20 GDP growth at 2.6 percent in 2016, similar to last year and rising to only 2.9 percent in 2017. And downside risks to global growth are increasing,” he added.
Moody’s said economic expansion in Indonesia and the Philippines will likely strengthen in 2016 and 2017, with domestic demand providing the main engine of growth.
The ratings firm noted that gross fixed capital formation growth of the Philippines is accelerating rapidly, and is picking up pace in Indonesia as well.
“In each case, public investment contributed to the pickup as governments in both countries sought to gain further traction in developing much-needed infrastructure,” Moody’s said.
“Lower oil prices have provided a greater lift to economic growth in the Philippines, with household consumption growing in excess of 6 percent for only the second time over the past 25 years,” it added.