...the ASEAN economies

Asean economies poised for growth despite global difficulties

By Wichit Chaitrong in Bangkok/The Nation

Asia News Network 

Fri, Jul 13, 2012

Bangkok (The Nation/ANN) - Despite the weaker external environment, growth in Southeast Asia is expected to remain robust, supported by strong domestic demand and reconstruction in flood-affected areas, the Asian Development Outlook Supplement released yesterday said.

"Growth in Thailand is expected to be 5.5 per cent or higher this year, accelerating from almost zero per cent growth last year as a result of last year's devastating floods," Haruhiko Kuroda, president of the Asian Development Bank (ADB), told a press conference on the sidelines of yesterday's Thailand-ADB-IMF conference.

Disruption of supply chains caused by last year's devastating floods has been overcome as mentioned by Finance Minister Kittiratt Na-Ranong, said Kuroda, referring to Kittiratt's comments on strong recovery in automobile production and expected quick recovery of the electronics sector.

Private consumption and investment is very strong in Thailand, said Kuroda.

Asked about the outlook for gross domestic product growth in Myanmar, Kuroda said the country had been isolated from the rest of the world for the past three decades.

"Now Myanmar has integrated much with Asean and the global economy, and we expect substantial growth over the coming years," he said.

Myanmar, however, has not made sufficient investments in infrastructure projects, education and healthcare. Investment in these areas are much needed now, he said. And the capacity of the Myanmar government must be enhanced, he suggested.

ADB and World Bank will provide technical assistance and policy advice to Myanmar but financial support must be provided only after the country clears debts owed to the two institutions, he said.

According to ADB's report, vibrant domestic demand and private investment appeared to drive Southeast Asian growth in the first half of this year. The region's economies expanded 4.3 per cent in the first quarter after a weak 2.9-per-cent growth in the last quarter of 2011. It was mainly due to the strong rebound in Thailand and the robust growth in the Philippines.

The open economies of Singapore and Malaysia, however, posted slower growth in the first quarter as a result of the weaker external demand. Vietnam's first quarter growth was also much lower than expected, pulled down by a contraction in construction and flat industrial production, said the report.

Meanwhile, Kuroda said that China's economy would report 8.2-per-cent growth, though slowing down from April's forecast of 8.5 per cent. Next year, China will grow 8.7 per cent. China is Thailand's largest export market.

He expected the Chinese government to launch fiscal stimulus following monetary policy easing lately. South Korea has already implemented public spending to boost growth, he said.

India's growth forecast has moderated as high inflation and trade deficit make it difficult to ease monetary policy to stimulate demand, according to the report.

Developing Asia as a whole will grow 6.6 per cent in 2012 and 7.1 per cent in 2013, lower than the 6.9 per cent and 7.3 per cent forecast in ADB's Asian Development Outlook published in April, said Kuroda.

Kuroda said that he agreed with the consensus view that the euro zone would show a slight minus growth this year and slight positive growth next year. Economic situations could change when ADB issues its updated economic forecast in September, he added.