Slow Asian economic growth to last until 2016

JAKARTA: Growth in Southeast Asia’s six major economies is expected to slow down through 2016, the Organization for Economic Cooperation and Development (OECD) revealed on Tuesday, urging them to find new growth drivers as the key US and European export markets were stuck in a crisis.

In its outlook for the region, the OECD said that domestic demand would become a more important element of growth as the developed world struggled to recover from the global downturn.

According to the Paris-based group, the six key economies of Indonesia, Malaysia, the Philippines, Singapore, Thailand and Vietnam would grow “five percent in 2011, and . . . 5.6 percent during 2012-2016, two percent lower than in 2010.”

The forecast came after the OECD warned on Monday that leading economies were in danger of sinking into a fresh recession or even a depression as leaders in Europe and the United States struggled to address huge debt troubles.

Growth in the eurozone is set to stall next year, dropping to 0.2 percent from 1.6 percent this year, while the organization said that US growth could slump to just 0.3 percent next year from 1.7 percent this year.

With this in mind, the OECD added that regional governments should start to diversify away from their export-led structures.

“Previously heavily dependent on external demand, domestic drivers will play a more important role in Southeast Asian economies going forward,” the group said in its outlook, which was launched in Jakarta.

“A new type of economic growth is needed in Southeast Asia,” Mario Pezzini, director of the OECD Development Center, said in a statement.

“Every cloud has a silver lining. The global uncertainty is an opportunity to re-invent growth,” the statement added.

Large investments in infrastructure and private consumption, driven by the growing middle class and reforms in social policies, are the increasing engines of growth in the region, the report said.

Structural policies are needed to boost productivity and shield the economies of the 10-country Association of Southeast Asian Nations (Asean) from the impact of global uncertainty and other external shocks, it added.

According to the report, comprehensive reforms are needed in many sectors, including healthcare, infrastructure, the labor market and agriculture.

Asean—which also includes Myanmar, Cambodia and Laos—has a total population of more than 600 million and is forecast to see gross domestic product of $1.8 trillion this year.  –AFP