Morgan sees higher Asean-4 GDP growth
FOR all the concerns about rising inflation, the major Asean economies will likely deliver higher-than-expected growth in 2008, say Morgan Stanley Asia’s economists. But the outlook for the region in 2009 looks ‘challenging’.
The investment bank has actually raised - if marginally - its forecast of 2008 GDP growth for the Asean-4 region (Singapore, Malaysia, Thailand and Indonesia) to 5.6 per cent, from an earlier estimate of 5.5 per cent.
A stronger-than-expected global growth backdrop and a relatively slow monetary policy response to emerging inflation risks have resulted in the region’s 2008 first-half growth being mostly higher than it had earlier forecast, Morgan Stanley says in a report this week.
While it has kept intact its recently upgraded GDP growth projections for Malaysia (5.7 per cent) and Thailand (5.6 per cent), it has now jacked up the forecast for Indonesia to 6 per cent (up half a point) and slashed Singapore’s to 4.3 per cent, from 5.1 per cent previously, following the poor Q2 numbers just released.
But the Asean economies will ‘face headwinds’ next year as higher inflation cuts into purchasing power and capital investment decisions, domestic demand weakens from policy tightening, and export markets soften, it says. There’re also ‘idiosyncratic risks’ in the form of political uncertainty in some countries, it notes. As such, it has cut its 2009 GDP growth forecast for the region by close to one point, to 5.1 per cent.
From an earlier estimate of 6.1 per cent, Morgan Stanley now sees the Singapore economy growing just 4 per cent in 2009.
According to the bank, Singapore will, compared with its Asean neighbours, face the ‘maximum adverse knock-on effects’ of a global slowdown as its growth strategy has been fully centred on catering to global demand. In 2009, with the property market softening, support from construction will wane at a time when external conditions weaken further, it notes.
But, as the only country in the region with a ’stable and predictable’ political climate, Singapore faces ‘the least uncertainty in terms of what could go wrong relative to market expectations’.
Region-wide, Morgan Stanley sees upside risks to inflation if the global slowdown does not quite ease the commodity demand-supply mismatch. This, in turn, could spell more monetary tightening - which, in the face of further weakening of global demand, would exacerbate growth risks.
Voicing similar views, HSBC Global Research also says that its 2008 growth forecasts for Asia are ‘largely intact’ even after jacking up markedly the inflation estimates, as it believes that the region’s economic fundamentals are generally sound.
But if the US economy slides into a deep recession, and/or if the Asian financial sector suffers a credit crunch, and commodity prices fail to stabilise, the inflation and growth outlook in 2009 will be ‘more severe’.
Source : Business Times - 12 July 2008
Singapore Property - Buy, Sell, Rent, Invest
Mindy Yong
(+65)91002985
mindy@mindyyong.com
Thailand police arrest key anti-govt leader »« Help with electricity hikes on the way
