Trucks loaded with Vietnamese lychees head towards China. AMRO forecast that ASEAN+3's growth would reach 4.5 per cent in 2024, reflecting the impact of weaker external demand on Vietnam and Singapore. (Photo: VNA)
AMRO's quarterly update of the ASEAN 3 Regional Economic Outlookalso has a positive outlook for the country's inflation, which is expected tomoderate further to 2.9% this year and 2.7% next year.
However, its growth forecast for 2023 has been reduced from 6.8%to 4.4% on grounds of weak manufacturing exports.
AMRO has maintained the growth forecast for the Plus-3 economiesat 4.6% for 2023, up from 3.2% in 2022. The projected growth is reviseddownward to 4.5% for 2024 to reflect the impact of weaker external demand onSingapore and Vietnam.
"Both Singapore and Vietnam are highly exposed tomanufacturing exports, which are still weak across the region," said AMROChief Economist Hoe Ee Khor.
He also pointed out that the Plus-3's economic recovery was ridingon resilient demand within the region. Private consumption growth stayed firmin most economies, supported by a rebound in the labour market and easinginflation.
"Inflation is coming down quite nicely and faster than weexpected, although it's still above the target for most countries," saidthe economist.
Headline inflation remained relatively elevated in the Philippinesand Singapore due to supply constraints in various sectors. Core inflation hasbeen relatively sticky, especially in those economies where demand conditionswere strong.
AMRO has revised its 2023 inflation forecast for the region excludingLaos and Myanmar to 3.0%, lower than its previous projection of 3.4%. Thedecelerating inflation has allowed many central banks to ease the pace ofmonetary tightening, giving a big push to consumption.
"Central banks have really paused their tightening cycles.Some of them, in fact, began to ease their monetary policy, especially in Vietnam,"said the economist.
The drag on exports was particularly acute for highly-open ASEAN 3economies. While export growth remained negative in April, it is forecast totake a turn for the better soon, on the back of a turnaround in the globalsemiconductor cycle.
The steady return of Chinese visitors would also provide anadditional push for growth. Ultra-regional tourism has been robust, offsettingthe slow return of tourists from China so far due to the late reopening ofborders.
AMRO also warned of the increase in market risk aversion sinceMarch, following banking sector distress in the US and EU, signs of weakness inChina's recovery, and the threat of US debt default, which have put downwardpressure on regional currencies and equity markets.
"One major risk will be the potential recession in the US andEU, which will materialise and dampen export demand," said theeconomist./.
VNA
