THE Asian Development Bank (ADB) expects South-east Asia’s gross domestic product (GDP) to grow 4.3 per cent this year, down from its September forecast of 4.6 per cent. September’s forecast was also a downgrade from April’s prediction of 4.7 per cent.

Growth is anticipated to pick up in 2024 to 4.7 per cent, but this, too, is a downward revision from September’s 4.8 per cent and April’s 5 per cent forecasts.

The downward revisions reflect the continued lacklustre performance of the manufacturing sector in South-east Asia’s larger and more trade-oriented economies, such as Malaysia, Thailand and Vietnam, the bank said in its Asian Development Outlook December 2023 report released on Wednesday (Dec 13).

Growth is expected to slow in Timor-Leste this year, and in Myanmar next year, the report added.

Weak external demand in Thailand

Thailand had one of the biggest cuts in its 2023 growth forecasts – from 3.5 per cent to 2.5 per cent – due to further contraction in merchandise exports, lower public spending, and softer public and private investment.

Worries about higher production costs led to business sentiment falling in October. Amid weaker business indicators, private investment is expected to decline this year.

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The bank’s 2024 growth forecast for Thailand was revised to 3.3 per cent from 3.7 per cent on weaker-than-expected tourism receipts and merchandise exports, as well as subdued business sentiment and investment.

Private consumption and tourism are Thailand’s main economic drivers.

Unexpected slowdown in Vietnam

Vietnam’s growth forecast for 2023 was cut to 5.2 per cent from 5.8 per cent, although 2024 growth estimates remained unchanged at 6 per cent.

The country’s economy slowed more than expected in the first nine months of 2023, growing 4.2 per cent, or half the rate in the corresponding period last year.

The weaker growth reflected the cumulative impact of falling external demand, weak budget execution, and sluggish recovery in jobs and domestic consumption.

On the supply side, economic growth is being impeded by lower industry and services output.

Subdued growth in Malaysia

Malaysia’s growth projections were cut to 4.2 per cent from 4.5 per cent for 2023, and to 4.6 per cent from 4.9 per cent for 2024.

The nation’s growth was constrained by weakened global demand, with exports of electrical, petroleum and palm oil products declining further.

The country enjoyed firmer domestic demand, improved employment conditions and rising tourism; but subdued manufacturing and weak external demand continued to keep a lid on Malaysia’s growth.

Strong domestic demand in Indonesia, the Philippines

Growth forecasts for Indonesia and the Philippines remained unchanged.

Both nations showed robust growth in the first nine months of this year, and this momentum is expected to continue.

In 2024, higher public investment and rising consumer spending will boost growth.

In particular, the Philippines had one of the highest growth forecasts of the region at 5.7 per cent for 2023 and 6.2 per cent for 2024.

Meanwhile, Indonesia’s growth forecast was maintained at 5 per cent for this year and next year.

Stable growth in Singapore

Services and construction continued to grow strongly in Singapore, but external demand remained weak.

The bank maintained its growth forecast at 1 per cent this year and 2.5 per cent in 2024.

The Republic’s manufacturing output declined in all subsectors except transport engineering, although signs are emerging that external trade is improving.

Developing Asia

Looking beyond South-east Asia to developing Asia in a wider context, the bank revised its 2023 growth forecast upwards to 4.9 per cent from its earlier 4.7 per cent.

Its growth estimate for 2024 is maintained at 4.8 per cent.

The report noted that domestic demand and services will continue to support growth into 2024, with manufacturing gradually picking up.

ADB publishes its economic forecast report every April, with brief reports and updates in July, September and December.