China sneezes, everyone gets sick: Southeast Asian growth likely to slow in 2015

China sneezes, everyone gets sick: Southeast Asian growth likely to slow in 2015

TOKYO — Key Southeast Asian economies are expected to decelerate this year, dragged down by a sputtering China, according to the Japan Center for Economic Research.

     The center’s latest report cuts forecasts from January, taking into account the Chinese slowdown in the first half. China’s growth is now seen slipping from the 7.3% of 2014 to less than 7% this year. The four major Southeast Asian economies will grow 4.4%, slightly less than last year.

     Malaysia stands to suffer the most from the Chinese slowdown, expanding just 4.4% rather than the year-earlier 6%. The export-reliant country depends heavily on China. The sales tax introduced in April is also expected to dampen domestic consumption.

     Thailand also relies on China. But growth will recover to 2.7% this year following political unrest that slammed the mainstay tourism industry in 2014. But a decline in Chinese tourists could still take a toll.

     Indonesian growth will likely miss 5% for the first time in six years — a level not seen since 2009, when the world was still reeling from the global financial crisis. The center cut its forecast by 0.8 percentage point from January’s, considering delays in large-scale infrastructure investment promoted by President Joko Widodo. Besides declining exports to main trading partners Japan and China, slowing consumption could weigh down growth.

     The Philippines is steadier than the three others, with growth projected at 5.5%. But the fate of President Benigno Aquino’s economic policies after next year’s presidential race remains a concern. The constitution bars Aquino from running again.

     The center sees most of the quartet returning to 2014 growth levels in 2016, thanks to recoveries in developed economies.

     Political stability and structural reforms are the key to Asia’s growth, the center says.

     The center projects growth in real gross domestic product for the five countries in its twice-yearly report on Asia’s short-term economic outlook.

(Nikkei)

China sneezes, everyone gets sick: Southeast Asian growth likely to slow in 2015