JAKARTA—Growth in Southeast Asia’s six major economies is expected to slow through 2016, the OECD said Tuesday, urging them to find new growth drivers as the key US and European export markets are stuck in crisis.
In its outlook for the region, the Organization for Economic Co-operation and Development (OECD) said domestic demand would become a more important element of growth as the developed world struggles to recover from the global downturn.
It said the six key economies of Indonesia, Malaysia, the Philippines, Singapore, Thailand and Vietnam would grow “five percent in 2011, and… 5.6 percent during 2012-2016, two percent lower than in 2010,” the OECD said.
The forecast comes after the Paris-based group warned on Monday that leading economies were in danger of sinking into a fresh recession or even a depression as leaders in Europe and the United States struggle to address huge debt troubles.
Growth in the eurozone is set to stall next year, dropping to 0.2 percent from 1.6 percent this year, while it said the US growth could slump to just 0.3 percent next year from 1.7 percent this year.
With this in mind the OECD said regional governments should start to diversify away from their export-led structures.
“Previously heavily dependent on external demand, domestic drivers will play a more important role in Southeast Asian economies going forward,” the group said in its outlook, which was launched in Jakarta.
“A new type of economic growth is needed in Southeast Asia,” said Mario Pezzini, director of the OECD Development Center.
“Every cloud has a silver lining. The global uncertainty is an opportunity to reinvent growth,” he said in a statement.
Large investments in infrastructure and private consumption, driven by the growing middle class and reforms in social policies, are the increasing engines of growth in the region, the report added.
It added that structural policies are needed to boost productivity and shield the economies of the 10-country Association of Southeast Asian Nations from the impact of global uncertainty and other external shocks.
It added that comprehensive reforms were needed in many sectors, including healthcare, infrastructure, the labor market and agriculture.
Asean – which also includes Myanmar, Cambodia and Laos – has a total population of more than 600 million and is forecast to see gross domestic product of $1.8 trillion this year.