Growth in Southeast Asian countries is expected to slow in the latter part of the year as a result of the current US government shutdown, which has added to the instability of the already weak global economy.
Moody’s Analytics, a research affiliate of credit-rating firm Moody’s Investor Service, said the US government shutdown might shave off half a percentage point from the growth of Southeast Asian economies in the fourth quarter.
“The political impasse in the US is expected to shave 0.5 percentage point off fourth quarter gross domestic product growth and possibly far more if US lawmakers are unable to lift the debt ceiling,” the firm said.
However, economies in the region are still expected to grow faster than most parts of the world, given the buffers that policymakers have put up in the last decade.
“The outlook for Southeast Asia remains positive and the steady improvement in the global economy should lift growth toward its long-run trend by the end of 2014,” the firm said in a report.
The firm said Southeast Asia’s economies tend to be export-driven, so the recent stabilization in Europe, upbeat data from Japan and policies aimed at stabilizing China’s economy were all positive developments for the region.
Trade-reliant economies like Singapore, Thailand and Malaysia, would be the biggest beneficiaries of a recovery in global demand. Economies driven by domestic demand like the Philippines and Indonesia, which also have significant trade ties with China and Japan, are also expected to reap some of the benefits.
Moody’s Analytics likewise said Southeast Asian countries could also take advantage of the current rivalry between China and the US to attract more investments.
“Southeast Asia’s direct trade and financial links with China have strengthened over the last five years, while the US has been a major but fading player,” the firm said.
“But with the recent US pivot to Asia, governments of Southeast Asia may be able to leverage this rivalry to attract investment, capital and military know-how,” it added.
Moody’s expects the Philippines to grow between 6.5 and 7 percent this year, mirroring the International Monetary Fund’s (IMF) forecast of a 6.75-percent expansion this year.
These forecasts are in line with the Philippine government’s official target of 6 to 7 percent this year, although economic managers have said growth may be closer to 8 percent.