The Asian Development Bank (ADB) yesterday lowered its economic growth forecasts for Southeast Asia for this year and 2014 by 0.1 percentage point in the wake of the strong typhoon that hit the Philippines recently and political uncertainties in Thailand.
The Manila-based bank cut Southeast Asia's economic growth projections to 4.8% for 2013 and 5.2% for 2014.
The revision reflects the political crisis in Thailand in the last quarter of 2013 and its adverse impact on consumption and tourism. The devastation wrought by Typhoon Haiyan has undermined the Philippines growth this year, though this has been mitigated by the relief efforts under way and transfers from abroad supporting consumption, according to the Asian Development Outlook Supplement released yesterday.
The ADB also slashed growth estimates for the Asean 5 _ Thailand, the Philippines, Indonesia, Malaysia and Vietnam _ by 0.1 percentage point to 5.1% for this year and 5.5% for next year.
The ramping up of reconstruction should boost economic activity in the Philippines in 2014, while the ADB expects some recovery in Thailand's exports and disbursements from government investment programmes, but political turmoil could still dampen growth.
The Bank of Thailand's Monetary Policy Committee (MPC) said in its minutes for Nov 27's policy rate call released yesterday that it saw risks to the economic growth outlook due to the ongoing political tensions when it surprisingly cut the benchmark rate by 25 basis points to 2.25%. The latest downward revision of the country's economic growth forecast for this year to 3% from the 3.7% projected in October did not take the impact from political factors into account.
The ADB said that Singapore's growth is expected to be more rapid in 2013 in light of strong third-quarter growth supported by externally oriented sectors including exports.
Growth forecasts for the rest of the subregion's economies are generally in line with previous assumptions. Indonesia, where private consumption is buoying growth, expects recent increases in interest rates will moderate domestic demand as exports recover slowly.