Singapore: Our take on the Southeast Asian economy for next year is one of firm growth with an average of just over 5%, making it a genuine bright spot around the world. However, given the vast area and different priorities among nations in this region the growth story is mixed, with some hitting higher than average and others actually set for a tough 12 months.
Among key exciting developments to expect in 2013 is a Free Trade Agreement between Asean and India, due to be signed in August, something that propel vast trade like the China-Asean agreement did two years ago.
Investors are shifting their money towards Southeast Asian markets where strong consumer spending is expected to boost domestic demand while the region’s deca-millionaires (those earning $10m or more) already outnumber those in Europe and are expected to exceed those in the United States within the next decade.
Our regular go-to economist Paul French from research firm Mintel told SeaShip News that he sees “generally steady progress” for Southeast Asia in the 5% range region-wide.
“Domestic consumption is looking stronger in Malaysia, Thailand and Indonesia,” he said, “while the Philippines looks likely to grow at better-than-expected rates thanks to better targeted investment and service industries growth. Indo-China remains worrisome and Vietnam remains the boom that never quite happens while we'll wait and see if Burma's reintegration into Southeast Asia can help list overall regional performance with new investment flows into Rangoon.”
Below we provide snapshots of economic predictions for most of the countries in the region.
Barclays Research predicts that Indonesia's economy, the biggest in Southeast Asia, will expand 6.3% in 2013, the same pace as this year's projected growth. Last year it grew 6.5%, the fastest pace since 1996.
Among the 10 emerging Asian nations covered by Barclays Research, the country will have the third-fastest economic growth after China and India next year.
Barclay's prediction is below the Indonesia's government forecast of 6.6% to 6.8% for 2013 after growing 6.5% this year.
It is also lower than the projection of the central bank, Bank Indonesia, of 6.6% to 6.7% for 2013.
Malaysia's economy has been resilient amid the challenging global economic conditions, with GDP growth estimated at 5.1% this year and 5% in 2013, according to the World Bank.
The National Economic and Development Authority (NEDA) reckons the Philippine economy has grown at around 6.5% for 2012. The archipelago has ditched its ‘sick man of Asia’ description to become one of the fastest growers.
The World Bank is also seeing a much-improved economy for the Philippines as it lifted its growth forecast for the country this year and in 2013. It said that consumption, remittances and government spending will drive overall growth.
For 2013, the bank projected that the Philippine economy will expand by 6.2 percent from its previous estimate of 5 percent.
Thailand's economy will likely expand by more than 5% in 2013, driven mainly by a boost in public investment, Deputy Prime Minister Kittiratt Na-Ranong said earlier this month.
The Thai economy will grow between 5.5% and 6.6% next year on the back of a recovering global recovery, strong exports and healthy domestic demand led by infrastructure spending, predicts Rangsit University.
Vietnam’s economy expanded at the slowest pace in 13 years in 2012 as a slump in bank lending damped domestic demand. GDP rose 5.03%, down from 5.89% in 2011 and the least since 1999 when it grew 4.77%, the General Statistics Office said December 24. Vietnam may expand about 5.5% next year, the government said on December 10, a view deemed optimistic by many bank analysts.
The monetary authority this month cut benchmark interest rates for a sixth time to help companies “cope with difficulties in production and business,” even as the World Bank warned against easing too soon.
Cambodia is projected to have the second fastest-growing economy in Southeast Asia over the next two years, the World Bank said in a regional economic update this month.
GDP is forecast to expand 6.7% next year and 7% in 2014. That compares with an estimated 6.6% this year.
Myanmar is on course to achieve 5.5% economic growth this year and 6.3% in 2013, the World Bank has predicted.
"Burma [Myanmar] can arguably be characterised best as a country on a triple transition path," the World Bank said.
The Southeast Asian country is moving from five decades under military rule to a democratic system, from 60 years of fighting ethnic insurgencies to relative peace and from a centrally directed, socialist economic system to a market-oriented, open economy, it said.
"Each of these transitions is complex and on their own would challenge the capacity of most states," the World Bank said. "In unfolding simultaneously, they also pose the risk that setbacks in any one of these realms will affect the others."
Thus far this report has been optimistic on prospects across the region, but for the region’s most developed economy there is concern about 2013. Singapore is likely to lag its neighbours growth-wise in the upcoming Year of the Water Snake.
Morgan Stanley researchers noted that Singapore will be the most vulnerable nation in the Asean bloc, given its slow growth and strong inflationary pressures.
Barclays economist Leong Wai Ho noted that the economy has "barely grown" since the second quarter, dragged down by weak manufacturing.
Whatever the state of the region’s economies SeaShip News will be here on the ground providing exclusive insights across this dynamic shipping area. Happy New Year to all our readers!