Weak export demand, ADB lowers Southeast Asia growth outlook

The growth outlook for Southeast Asia this year has been cut from 4.6% to 4.3%, amid weakening demand for export products, according to the Asian Development Bank (ADB).

ADB hạ dự báo triển vọng tăng trưởng Đông Nam Á do nhu cầu xuất khẩu yếu

The growth outlook for Southeast Asia this year has been cut from 4.6% to 4.3%, amid weakening demand for export products, according to the ADB. (Source: Jakarta Globe)

The region's economy is expected to grow 4.9% this year, up from a previous forecast of 4.7% in September, according to the Asian Development Outlook (ADO) December 2023 report released today. The growth forecast for next year is maintained at 4.8%.

China’s economy is forecast to grow 5.2% this year, up from a previous forecast of 4.9%, after household consumption and public investment boosted growth in the third quarter. India’s growth outlook was raised to 6.7% from 6.3% after faster-than-expected growth in July-September, driven by double-digit growth in the industrial sector.

Upbeat growth in China and India more than offset an expected decline in Southeast Asia, due to sluggish manufacturing activity.

“Developing Asia continues to grow at a robust pace despite a challenging global environment, and inflation in the region is gradually coming under control,” said ADB Chief Economist Albert Park. “However, risks remain, from rising global interest rates to climate events such as El Niño. Governments in Asia and the Pacific must remain vigilant to ensure economic resilience and sustainable growth.”

According to the ADO December 2023 report, the region's inflation forecast for this year has been reduced to 3.5% from 3.6% previously. For next year, inflation is expected to increase to 3.6%, compared to the previous forecast of 3.5%.

The growth outlook for Southeast Asia this year has been cut to 4.3% from 4.6%, amid weakening demand for exports. The outlook for economies in the Caucasus and Central Asia has improved slightly, while the forecast for Pacific economies has been left unchanged.

Vietnam’s growth forecast for this year has been cut to 5.2% from the previous forecast of 5.8%, while growth in 2024 is forecast to remain at 6.0%. A weaker-than-expected recovery in external demand continues to weigh on industrial and service sector growth, slowing the recovery in employment and domestic consumption.

Prudent and proactive monetary policy, supported by effective control of prices of gasoline, electricity, food, health care and education, will help control inflation. Inflation in Vietnam is forecast to remain at 3.8% in 2023 and 4.0% in 2024.

Risks to this outlook include persistently higher interest rates in the United States and other advanced economies, which could contribute to financial instability in vulnerable economies in the region, particularly those with high debt. Potential supply disruptions due to El Niño or the conflict between Russia and Ukraine could also trigger inflation, particularly in relation to food and energy.

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