TOKYO — Economists have downgraded this year’s growth forecast for Malaysia, the Philippines, Singapore and Thailand due to declining China-bound exports and other factors, according to a quarterly survey compiled by the Japan Center for Economic Research and Nikkei.
The JCER and Nikkei, which conducted the latest economic outlook survey for Asian economies from Sept. 1 to Sept. 21, received 37 responses from economists and analysts in the five major members of the Association of Southeast Asian Nations — Indonesia, Malaysia, the Philippines, Singapore and Thailand — as well as from India.
The forecast for this year’s economic growth rate for the five ASEAN nations was revised down to 3.9% from 4.2% in the previous survey, in June, marking a second consecutive downward revision.
Malaysia’s expected GDP growth for this year was downwardly revised to 4%, a 0.4-point decline from the previous survey, as the nation’s exports continue to decline. Part of the decline is due to weakened semiconductor exports.
China’s economy has been lackluster since the country’s rulers lifted their zero-COVID policy. The troubled property sector has been a particularly strong drag on the economy.
Suhaimi Ilias of the Maybank Investment Banking Group said he had raised his forecast in May after the first quarter GDP release and amid a “China reopening euphoria.” He now says that euphoria has “soured.”
“China is Malaysia’s largest trading partner, accounting for about 20% of Malaysia’s exports and imports,” said Mohd Sedek Jantan of UOB Kay Hian Securities. “This could lead to a decrease in demand for Malaysian exports, such as electronics, palm oil and rubber, and a decline in Malaysia’s export revenues.”
Thailand’s outlook for this year was downgraded by 0.9 points, to 2.9%, from the June forecast, with China’s slowdown considered the nation’s most significant risk.
“There remains downside risk from [the] global economic slowdown, which is poised to impact Thailand’s exports and tourism receipts during the remainder of this year,” said Lalita Thienprasiddhi of Kasikorn Research Center.
In Singapore — a city-state heavily reliant on external demand — the 2023 growth outlook was revised to 0.6%, 0.7 points down from the previous forecast. Once again the culprit was declining exports, especially of semiconductors and other technology products. The megalopolis’ exports have been declining since last year.
“In the near term, growth in Singapore’s economy is weighed down by decelerating global growth and the downturn in the electronics cycle,” Manu Bhaskaran of Centennial Asia Advisors said, adding that he is also concerned that there is “little transparency” in regard to China’s economic conditions.
China’s slowdown was the top risk factor in three of the six countries surveyed — Malaysia, Singapore and Thailand. Among other major risks raised were U.S. monetary policy, inflation and rising commodity prices. Inflation, which dampens household consumption, was the biggest risk in the Philippines, whose forecast was revised down to 5.1% from 5.9% in the previous survey.
Bucking the regional trend was Indonesia, Southeast Asia’s largest economy. In the survey, the respondents upgraded the country’s 2023 GDP growth outlook to 5.1% from 4.9% in the previous survey, citing steady domestic demand.
“The domestic economy is resilient [enough] to absorb external pressures,” Bank Mandiri’s Dendi Ramdani explained.
Permata Bank’s Josua Pardede pointed out the possible impact of a harsh El Nino, a climate pattern that typically harasses Southeast Asia with hot and dry conditions. “El Nino could affect Indonesian inflation in 2024, especially because it affects the supply of rice and other foodstuff in Indonesia.”
While most ASEAN countries are struggling, the survey suggests India’s post-pandemic recovery appears still strong. The country’s growth forecast for the fiscal year that started in April 2023 was upwardly revised by 0.1 of a point to 6.2%.
However, the nation is beginning to see a slowdown in external demand. Aurodeep Nandi of Nomura India said, “Data for July-August so far suggests mixed trends for consumption and investment, and contraction in merchandise exports and import growth.”
Furthermore, the little rain and other abnormal weather conditions that El Nino is expected to bring pose an impending risk to the growing South Asian economy. As crops will likely be affected, food prices will almost certainly rise.
“Even as the overall sowing has been steady, a few major crops, particularly pulses, are lagging behind, thereby posing upside risks to future prices,” said Tirthankar Patnaik of the National Stock Exchange of India.