Growth in the ASEAN economies will continue well into 2020.
This is the forecast made by the market intelligence firm, IHS Markit, given the strong demand observed,
In their report, the firm explained that despite the prevailing US-China trade war creating tensions, it can anticipate growth in the region.
Several drivers will be supporting the growth momentum.
According to Phil Star, although the ongoing trade war has some contagion effects that will hit many export sectors of various ASEAN countries, the firm expects growth momentum to be resilient.
Moreover, even if the economies can feel the downturn in the global electronics sector, the strength of their domestic demand can somehow offset this.
In addition, IHS Marikit claimed that the significant decline in world oil prices that started back in May already reduced the majority of the inflation pressures.
This, in turn, enabled several ASEAN central banks to make their monetary policies less stringent.
Included among these central banks are the Bank Indonesia, Bank of Thailand, Bank Negara Malaysia and Bangko Sentral ng Pilipinas.
The positive effects of these monetary policy stimulus measures will boost growth until 2020.
Governments Bracing for US-China Trade War Impact
It is not as if the ASEAN governments are not doing anything to brace themselves against the impact of the trade war between the two great economies.
Rather, these governments have exerted efforts to increase spending on infrastructure programs.
One notable example is the Philippines’ “Build, Build, Build” Policy.
Moreover, the growth in most population-dense ASEAN nations’ spending will do a lot to drive growth. These nations are Indonesia, Vietnam, and again, the Philippines.
Still, if bilateral tariff measures continue to be imposed by the United States and China against each other, this can be a significant risk to the ASEAN economies.
ASEAN Growth Not Sustainable
If warring economies cannot reach a comprehensive trade deal soon, ASEAN’s economic outlook will turn sour.
China’s growth rate can slow down, and its manufacturing exports will decrease.
These alone can already send apparent negative transmission shock waves to the East Asian manufacturing supply chain.
Singapore, Malaysia, and Thailand, which are export manufacturing hubs, will be the first hit.
Others can feel the brunt of the slowdown soon enough.
Most ASEAN economies are also at risk of experiencing slowdown because of the electronics industry for their growth.
Stock Signals Philippines is your go-to website for stock analysis, tips and strategies in trading and investing in the Philippine stock market. StockSignals.ph is a property of Equilyst Analytics, Inc.