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Philippines, Vietnam top ASEAN growth

News, 24 March 2016

SINGAPORE: Growth prospects for export-oriented economies in Southeast Asia, such as Singapore, Malaysia and Thailand, will be weaker in 2016 and 2017, but some other countries are expected to do better, according to a new forecast.

In its assessment of ASEAN economies over the next couple of years, credit ratings agency Moody's forecast growth in Singapore, Thailand and Malaysia will be weaker than in countries where growth is driven more by domestic demand.

The Philippines is projected to deliver 6% GDP growth in both years, which will be matched only by Vietnam, while Indonesia is forecast to post 4.8% growth this year and 5.4% in 2017.

"While we expect growth recoveries in Singapore, Thailand and Malaysia to be shallow, Indonesia, the Philippines and Vietnam will post growth on par with, or exceeding, long-term averages by 2017," the report said.

The Philippines and Indonesia depend less on external trade than other major ASEAN economies, Moody's explained, whereas trade accounts for 346% of GDP in Singapore and 131% and 130% of GDP in Malaysia and Thailand respectively.

"As such, these three economies are susceptible to a prolonged period of subdued global demand via both the export channel and weaker investment demand," the report said.

In addition to the Philippines, Vietnam is also expected to outperform all its ASEAN peers this year and next, even though external trade accounts for 181% of its GDP, Business World reported.

Moody's said: "The country is benefitting from strong manufacturing activity and rising FDI (foreign direct investment) inflows, as foreign investors look to tap into a large and competitive labor force, as well as greater market access for Vietnamese exports resulting from preferential trade arrangements such as the Trans-Pacific Partnership Agreement (TPP)."

Data sourced from Moody’s, Business World; additional content by Warc staff