Asean 5 seen to post robust gains in 2010

SOME OF Southeast Asia’s top economies will not only recover from the ill effects of last year’s financial crisis but may even post strong gains, topping most expectations, according to Standard & Poor’s.

In its latest paper, S&P recognized the robust performance of five economies in Southeast Asia, citing in particular their average growth of 7.9 percent in the first semester of the year.

Apart from the Philippines, other countries comprising the Asean 5 (Association of Southeast Asian Nations) are Vietnam, Malaysia, Indonesia, and Thailand.

The credit rating firm attributed the favorable performance of the five economies to rising investments and consumption.

“Overall, a surge in investment and net exports, supported by consumption growth, had spurred Asean 5 growth. A V-shaped recovery is firmly on track,” said Dharmakirti Joshi, chief economist at one of the subsidiaries of S&P.

Some countries in the group have not yet released their official growth figures for the first six months. But in the case of the Philippines, growth was reported at 7.9 percent—its highest in over three decades.

Philippine economic managers said that, because of the strong first half performance, they would have to review the country’s official growth target for 2010, believing that the actual figure could be higher than the 5 to 6 percent rate previously set.

“Fiscal and monetary policy stimulus has been a key growth driver for the Asean 5 … And since several Asean economies are highly export dependent, increased external demand for the region’s goods has also fueled growth,” said Joshi, whose comments were published in the credit rating firm’s statement.

The modest recovery of the United States and Europe has led to higher demand for export goods from the Philippines and its neighbors in Southeast Asia.

Philippine exports grew by 37.4 percent to $28.23 billion in the first seven months of the year from that of the same period in 2009, according to the National Statistics Office.

Interest rates in the Philippines and elsewhere in the Asean region likewise dropped to record lows as their respective central banks continued efforts to pump-prime their economies.

Low interest rates lead to an increase in bank loans which, in turn, spur consumption and investments.

However, S&P said growth of the economies in the region in the second half could be slower than that seen in the first half.

This is because some of the stimulus measures implemented earlier by their respective governments could be withdrawn due to the recovery of the global economy.

Some central banks in the region may soon raise their key interest rates, S&P said.

The credit firm expects average growth of the Asean 5 in the second half to be at 4.8 percent.

“The weaker second half outlook is due to the waning impact of inventory restocking off a weak base, fiscal stimulus withdrawal, and monetary policy tightening,” S&P said. –Michelle Remo, Philippine Daily Inquirer