Regional GDP growth already cooled to 4% in the first half of the year.
Economic growth in Southeast Asia is projected to ease to 4.5% in 2019 from 5.1% the previous year, according to a report by the Institute of Chartered Accountants in England and Wales (ICAEW).
Growth across the region slowed to 4% during the first half of the year, compared to 4.5% in the previous half, partly attributed to spillovers from US-China trade war.
Trade dependent countries like Singapore, Thailand and the Philippines were observed to have been dragged by slower export momentum, whilst Malaysia and Vietnam reflected a more modest deceleration in export growth and resilient domestic demand.
ICEAW added that central banks across the region may reduce policy rates to support domestic demand. Indonesia and the Philippines could likely lower interest rates again in Q4, and Thailand and Malaysia may decrease rates by at least 25bp in early 2020.
Singapore is expected to dip into a manufacturing-led technical recession in Q3. The Monetary Authority of Singapore (MAS) may shift to a zero appreciation bias in its key policy tool, SG$NEER, a trade weighted baskets of currencies against the SGD.
Vietnam is set to continue outperforming the rest of the region, though its GDP growth may slow to 6.7% in 2019 and 6.3% in 2020. It may likely be cut to 5.9% in 2020-21 compared to a baseline of 6.2% if the US imposes higher import tariffs.
In contrast, Myanmar’s economy is projected to expand 6.4% in 2018-19 and 6.8% in 2019-20 as the country benefits from opening up its economy to foreign investment.
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