BANGKOK – The Philippines and Indonesia will be the only economies in Southeast Asia to record growth this year but that growth will be sharply slower than in previous years with Indonesia hit by falling prices of commodities, the bulk of its exports.
Singapore will be Southeast Asia’s weakest economy, shrinking nearly 5.0 percent this year, while Thailand faces its worst recession in 11 years, reflecting a collapse in exports across Asia, a Reuters poll shows.
For the Philippines, the poll forecast the economy to expand by just 2.3 percent this year, lower than a 3.3 percent growth estimate in a similar poll in December and below government expectations for at least 3.7 percent growth, as a deepening global recession chokes exports and slows remittance inflows.
Singapore’s gross domestic product, or the value of all goods and services produced, is set to shrink 4.9 percent in 2009, according to the median forecast of the Reuters quarterly poll.
It would be the city-state’s worst-ever economic slump, and would mark a sharp turnaround after averaging 6.4 percent annual growth over the past five years.
As a small, open economy, Singapore is being badly hit by the downturn although analysts foresee it rebounding 3.9 percent in 2010 as fiscal stimulus kicks in.
In contrast, Southeast Asia’s biggest economy, Indonesia, is poised to expand by 4.0 percent this year, and 5.1 percent in 2010, as exports contribute only about a third of GDP, making it much less dependent on trade than its neighbors.
Still, the growth forecast is well down from a 4.8 percent estimate in a poll three months ago. Weak exports and falling commodities prices weigh on growth, and analysts said the government needed to take further steps to support the economy on top of last month’s $6.1 billion fiscal stimulus package.
In Malaysia and Thailand, crumbling exports are hurting demand. Thailand’s economy is set to shrink 1.5 percent this year while Malaysia will see a 1.2 percent contraction.
Malaysia launched a $16 billion stimulus after January exports fell 28 percent, the biggest drop in nearly 30 years.
“Even as the government dishes out a significant stimulus package, its effects are unlikely to reach the economy quickly enough to keep economic growth in positive territory for 2009,” said Standard Chartered economist Alvin Liew.
The poll forecast Malaysia would pick up slightly next year, with GDP growing 2.8 percent while Thailand is set for a 2.9 percent expansion in 2010.
First-quarter Thai GDP data due next month is expected to confirm that Southeast Asia’s second-largest economy is in recession after growth crashed by a record 6.1 percent in the fourth quarter of 2008 and exports plunged 25 percent in January.
The forecast that the economy will shrink 1.5 percent this year reverses a 2.8 percent growth forecast three months ago and an actual 2.6 percent expansion in 2008.
“We see downside risks to remain with the advanced economies that might continue to slide deeper. In such a scenario, all export-led Asian economies including Thailand will likely be dragged down from this projection,” said Pimonwan Mahujchariyawong, an economist at Kasikorn Research.
With tens of thousands laid off by exporters and tourism suffering from Bangkok airport’s closure amid political protests in November, aggressive stimulus spending by Prime Minister Abhisit Vejjajiva’s government and interest rate cuts will not spur demand enough to offset export falls, analysts said.– Vithoon Amorn, Reuters
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