Downgrades in growth forecasts for China, Vietnam cloud Asean+3 economic outlook for 2024
But the picture for next year is a shade rosier, with inflation expected to continue moderating
Published Thu, Oct 3, 2024 · 12:10 PM
WEAKER growth projections for several big regional economies led the Asean+3 Macroeconomic Research Office (Amro) to cut its overall growth projection for this year for the 10 ASEAN member states, as well as China, Hong Kong, Japan and South Korea.
The macroeconomics surveillance organization lowered its gross domestic product forecast for 2024 for the Asean+3 region to 4.2 per cent from an earlier July prediction of 4.4 per cent.
This is primarily due to downward growth revisions for China to 5 per cent from 5.3 per cent and Vietnam to 6.2 per cent from 6.3 per cent, said Amro in a quarterly report released on Thursday (Oct 3).
“We were relatively optimistic about China,” explained Amro’s chief economist Khor Hoe Ee in a same-day press briefing.
The research office earlier expected the country’s beleaguered real estate sector to bottom out at the end of this year, but now believes this will be delayed into next year.
As for Vietnam, Amro trimmed its growth forecast due to Typhoon Yagi.
Destroyed from landslides, flash floods
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Damages from Asia’s strongest storm this year are estimated at 81.5 trillion dong (S$4.3 billion), with export-oriented industrial hubs, factories, homes and farmland destroyed from landslides and flash floods.
The macroeconomics surveillance organization expects “a lot of reconstruction” after the typhoon and hence, Vietnam’s growth was pushed to next year, said Dr Khor.
Amro has raised its GDP forecast for Vietnam for 2025 to 6.6 per cent from July’s 6.5 per cent.
The research office also cut its 2024 estimates for Hong Kong to 3.3 per cent from 3.5 per cent, and for Indonesia to 5.1 per cent from 5.2 per cent in July.
Dr Khor clarified that the slight decline in Indonesia’s growth rate is “purely technical”, on the back of a second decimal point issue.
“Indonesia is one of the most resilient economies in the region,” he said.
All other growth projections for the year were maintained, except for Thailand’s, which was bumped up a notch to 2.8 per cent from 2.7 per cent.
“Our baseline forecast projection for Thailand is such that we will continue to see improvement in the underlying economy, supported by a recovery in tourism as well as the continuation of government disbursement,” said Amro group head and principal economist Allen Ng.
Overall, regional growth is expected to be driven by continued recovery in external trade, resilient domestic demand and a boost in tourism due to relaxed visa policies in several economies.
Brighter skies ahead
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Amro’s growth outlook for 2025 is a shade rosier.
The Asean+3 region is expected to expand at 4.4 per cent next year, up from an earlier forecast of 4.3 per cent.
Notably, China is expected to grow 5.1 per cent in 2025, compared with July’s prediction of 4.9 per cent.
Thailand’s growth next year was also revised upwards to 3.3 per cent from 3 per cent, while Vietnam’s was raised to 6.6 per cent from 6.5 per cent.
10 of these 14 regional economies are expected to see stronger economic expansion in 2025 than 2024, which aligns with broad expectations of stable global growth momentum amid easier financial conditions and resilient domestic demand, said Amro.
Continued moderating inflation
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Inflation for the Asean+3 region this year is anticipated to ease further to 1.9 per cent from July’s projection of 2.1 per cent, with July’s estimate also a downward revision from an earlier April forecast of 2.5 per cent.
This is excluding Laos and Myanmar, where inflation is largely driven by persistent currency depreciation.
The moderation in inflation this year reflects the continuing impact of tight monetary policy, softer food prices and lower imported inflation, said Amro.
A slight uptick to inflation to 2.3 per cent is expected next year – primarily due to higher price prints in China, Hong Kong, Brunei, Cambodia, Malaysia and Thailand.
But this is due to strengthening growth prospects alongside various supply-side factors, such as a reduction in energy subsidies, said the research office.
Overall, the region’s inflationary pressure “remains well-contained”, in line with the baseline expectation of normalization of the global inflationary trend, Amro added.
