'Southeast Asia to experience 'robust' growth'

Southeast Asia will experience “robust” growth over the next five years, led by Indonesia, as the region’s increasing reliance on domestic demand to drive expansion buffers it from global downturns, the OECD said.

Gross domestic product in Indonesia, Malaysia, the Philippines, Singapore, Thailand and Vietnam will expand an average 5.6 per cent from 2012 to 2016, the Organization for Economic Cooperation and Development said in a report on Southeast Asia’s economic outlook, released today.

“The regional economy will rely more on domestic demand, thereby increasing economic resilience to external shocks,” the OECD said in an executive summary of the report. Still, “the region needs to be vigilant over economic management against the background of continued global uncertainties and natural disasters,” it said.

Asia’s policy makers are increasing efforts to defend their domestic economies from a possible recession in Europe that threatens to exacerbate faltering demand for the region’s exports. Indonesia cut its benchmark interest rate this month to a record low, and deadly floods in Thailand and storms in the Philippines have further damped growth in those economies, adding pressure to ease borrowing costs.

“Global uncertainties, notably reduced confidence in the U.S. fiscal policy and continued Euro-area debt crisis, cast a shadow over Asian economies,” the OECD said. “The unprecedented scale of floods has added to downside risks to the near-term prospect of Thailand.”

The region’s current-account surplus will fall to 4.2 per cent of GDP by 2016 from 6.5 per cent in the 2003-2007 period, mainly due to import growth outpacing increases in exports, according to the report. The size and nature of adjustments will differ among countries, it said. -- Bloomberg