December 2019
M T W T F S S
« Nov    
 1
2345678
9101112131415
16171819202122
23242526272829
3031  
Tags
AIIB ASEAN ASEAN (R) ASEAN-ISIS Asia Beijing Big Tech CH: Hong Kong Country (R): Indonesia Country (R): Malaysia Country (R): Myanmar Country (R): Singapore Country: ASEAN Country: Australia Country: Cambodia Country: China Country: Germany Country: India Country: Indonesia Country: Japan Country: Laos Country: Malaysia Country: Myanmar Country: North Korea Country: Philippines Country: Qatar Country: Russia Country: Singapore Country: South Korea Country: Taiwan Country: Thailand Country: UK Country: United States Country: US Country: USA Country: Vietnam DE: 5G DE: Data privacy DE: Data security DE: e-Payments DE: Facebook Elections: Indonesia 2019 Elections: Thailand 2019 ESG: Climate Change ESG: Diversity ESG: Energy ESG: Green Finance ESG: Green Growth ESG: Haze ESG: Human Rights ESG: Modern Slavery ESG: Peatland ESG: Riau ESG: RSPO ESG: Smallholders ESG: Sustainability ESG: Sustainable/Green Infrastructure ESG: Water ESG: Workers Rights European Union Event: SDSWR Events: AAF Fukushima G20 Global Citizens Singapore Google Indonesia: Jokowi Institute: ERIA Institute: SIIA JP: Abenomics Leaders: Kim Jong Un Leaders: Lee Hsien Loong Megatrends: Digitisation Megatrends: New Media Megatrends: Populism MM: Aung San Suu Kyi MM: NLD MM: Rakhine State MY: GE14 MY: Mahathir Mohamad MY: Najib Razak Nicholas Fang Oh Ei Sun Region: Africa Region: Latin America Region: Middle East Reports Security: South China Sea Security: Terrorism SG: Lee Kuan Yew SG: SG Secure SG: Smart Nation SG: Society Simon Tay TH: Protests Topic (R): Belt and Road Topic (R): Business Topic (R): Digitisation Topic (R): Economy Topic (R): Green Finance Topic (R): Infrastructure Topic (R): Palm Oil Topic (R): Peatland Topic (R): Smallholders Topic (R): Sustainability Topic: Anti-Globalisation Topic: Belt and Road Topic: Business Topic: Development Topic: Digital Economy Topic: Digitisation Topic: E-Commerce Topic: Economics Topic: Economy Topic: Elections Topic: Environment Topic: ESG Topic: Finance Topic: Global Citizens Topic: Globalisation Topic: Human Trafficking Topic: Indo-Pacific Topic: Infrastructure Topic: Investment Topic: Labour Topic: Nuclear Topic: Palm Oil Topic: Race Topic: Regional Integration Topic: Religion Topic: Security Topic: Singapore-Malaysia Relations Topic: Small States Topic: SMEs Topic: Trade Trade: AEC Trade: CPTPP Trade: FTA Trade: FTAAP Trade: RCEP Trade: TPP Trade: War Trends (Digital): Cybersecurity Trends (Digital): Smart Cities UK: Brexit United States US: Obama US: Trump US: Trump WEF

Is Southeast Asia softening?

thailand-protest-wikimedia-600

24 Jul Is Southeast Asia softening?

It appears that Southeast Asia might face slower days ahead. The region’s predicted growth rate has been reduced to 4.7 per cent, according to a report by the Asian Development Bank (ADB). The revised forecast attributes the downgrade to political and economic road bumps in Indonesia, Thailand and Vietnam. In contrast to pessimism about Southeast Asia, the same report is optimistic about India and China’s growth prospects.

Indonesia has seen an overall decrease in economic productivity, especially in Q1 of 2014. Reasons include “soft external demand, low commodity prices, and a temporary ban on exports of selected minerals”. The country’s political fate will lie in the hands of its new president, Joko ‘Jokowi’ Widodo, requiring him to wield considerable economic clout to strengthen the economy.

In Thailand, political deadlock has affected growth prospects. A temporary cabinet and interim constitution will be implemented later this year, but General Prayuth Chan-Ocha has announced that actual elections will only take place in October 2015. Thailand’s stability hinges on whether a new functioning government can actually be installed by the army.

Vietnam faces uneasy conditions in the wake of a recent wave of anti-Chinese sentiment. The violent factory riots in May, after protests against China’s placement of an oil rig in waters also claimed by Vietnam escalated, were an anomaly. In Vietnam, strikes have usually taken a non-violent path. Such internally driven aggression could very well spell a rocky road ahead for the country.

While Southeast Asia’s growth for the next year is described with pessimism by the ADB, India and China’s growth rates are expected to accelerate. In particular, India’s GDP growth is estimated to hit 6.3 per cent for 2015-2016, driven by optimism over potential Indian reforms following the election of Prime Minister Narendra Modi. The ADB highlights Mr. Modi’s “10-point plan to revive the Indian economy, prioritising infrastructure and investment reform, the prompt resolution of inter-ministerial issues, efficient policy execution and government policy stability”. Projections for China are similarly optimistic, with the ADB predicting GDP growth of 7.5 per cent this year, and 7.4 per cent in 2015.

However, it should be noted that there are opportunities ahead for Southeast Asia to benefit from. Factors such as rising labour costs in China, seen by a 12-18 per cent annual rise in average wages between 2001 and 2011, will provide opportunity for the region due to its ready availability of cheaper labour. The establishment of an ASEAN Economic Community will present not only a more integrated production base but also a combined economy of 600 million consumers and US$2.3 trillion (S$2.85 trillion) in GDP.

As ASEAN officials have discussed, 2015 is a milestone and not a deadline for progress.

Sources:

In Asia, politics stands in the way of economic integration [South China Morning Post, 23 Jul 2014]

Asia Development Outlook Supplement [ADB, July 2014]

ADB Cuts Southeast Asian Growth Forecast To 4.7% [International Business Times (Reuters), 18 Jul 2014]

Asian Development Bank projects 6.3% growth for India in 2015-16 [The Economic Times, 18 Jul 2014]