Trade Tensions, Political Risks Weigh on Southeast Asian Economy

Date: 17 March 2019 - 21:17

News ID: ۶۴۳۴۸

MOSCOW (Dispatches) - Several Southeast Asian economies are facing a slowdown in inflation, weaker business investment, and a cooling in GDP growth amid the ongoing trade tensions between China and the U.S., as well as the upcoming elections.
Among other countries in the region, the Philippines and Indonesia are in focus, as some economists say these nations are exposed to the greatest risks of the growth-killing 'deflationary trap', similar to that faced by Japan in the 1990s and 2000s.
According to a new report from Japan's Nomura Bank, regional trade in Southeast Asia in set to decline to its lowest level since 2015, due to the side effects of disruptions in Sino-American trade, as well as a broader cooling in the global demand for manufactured goods and commodities.
Nomura experts said the economies affected by the looming GDP slowdown could include Hong Kong, Indonesia, Malaysia, the Philippines, Singapore, Taiwan, and Thailand. Some of these countries have prominent sources of growth and revenue outside the farming and manufacturing sectors, such as the massive financial hubs in Hong Kong and Singapore, or Thailand's tourism industry.
However, Indonesia and the Philippines lack such diversity in their sources of GDP expansion, economists at Bank of America Merryl Lynch said in a separate report.
Experts believe the exposure of regional economies to international risks has traditionally been elevated, but ongoing disruptions in global trade and realignment in supply chains could be particularly painful in these two countries, due to their reliance on export-oriented industrial production.