IMF Revised Upward Its Asean GDP Growth by 1 Percentage Point

In the latest World Economic Oulook (WEO), International Monetary Fund (IMF) revised upward its global real GDP projection by 2 percentage points to 3.9% yoy, from the 3.7% estimated in October last year. The optimism was attributed to the US tax policy changes, with a possible positive macroeconomic impact, in particular from the reduction in corporate tax rates, while economic growth in Europe and Asia will also be sustained this year.

In tandem with the higher global GDP growth, IMF also raised its GDP growth forecasts for Asean-5, that comprises of Indonesia, Malaysia, Thailand, Philippines and Vietnam, from 5.2% to 5.3% for 2018. However, several downside risks were also highlighted by IMF, including rich asset valuations and the possibility of a financial market correction, as well as risks of inwardlooking policies, geopolitical tensions, and political uncertainty in some countries. With IMF revising upward its global growth forecasts for 2018 and 2019, reflecting stronger growth in advanced Asian economies, we believe the outlook for trade and investment in the Asean region to remain positive.

In Philippines, the country’s real GDP growth rose by 6.6% yoy in 4Q17, after expanding by a revised 7% in 3Q17, posting eleven straight quarters of 6% growth or higher since 2Q15. For full year 2017, Philippines GDP growth expanded by 6.6% yoy in 2017, the third highest GDP growth in Asia, after China (6.9%) and Vietnam (6.7%). The Philippines’ economy was supported by private consumption in 4Q17, which has the highest share of 72.1% from the overall GDP.

On growth by industry, manufacturing sector remained steady at 8.8% yoy in 4Q17, albeit lower than the previous quarter of 10%. Meanwhile, mining and quarrying, as well as electricity, gas & water supply sector improved by 8.8% and 5.1% respectively, offset some slowdown in construction sector, which eased by 2.8% yoy in 4Q17. The government is expecting strong momentum from 2017 to likely continue into 2018, where GDP growth is forecasted to grow in a range of 7 – 8%, supported by healthy domestic demand, especially in both private consumption and investment.

Separately, Thailand’s gross exports slowed by 8.6% yoy in December after rising to 13.4% in November. The lower demand was reflected across the board. In particular, exports of principal manufacturing products, which has the largest share in total exports, eased from 13.3% yoy in November to 10% yoy in December. In contrast, gross imports grew to the highest level in five months, climbing by 16.6% yoy during the month. As a result, the country recorded a trade deficit of US$0.3 billion, the lowest since April 2015.

Source: Affin Hwang Research - 26 Jan 2018