TAIPEI (Taiwan News) – A recent report from Bloomberg predicts that the pace of economic growth in 2019 for Southeast Asia may be steady, but not particularly impressive, with several key risk factors weighing on the economic landscape for the ASEAN nations.
Bloomberg reporter Michelle Jamrisko notes that in addition to the U.S.-China Trade War which has already caused unease throughout global markets, there is also the problem of the U.S. Federal Reserve which recently increased interest rates on the U.S. dollar.
Economic analyst Tamara Henderson is quoted as saying “Asean growth and inflation look set to soften in 2019” but surmises that some national banks may delay increasing interest rates at first, in an effort to attract much sought investment.
Jamrisko predicts that Southeast Asia will face a year of high interest rates and limited growth. She provides five key factors that will present risks, and possibly create volatility in the region in 2019.
- The general global slowdown in recent years, complicated by the U.S. tariffs on Chinese goods may result in structural changes across the region.
- Slowdown in trade and manufacturing as a result of the U.S.-China trade war could radically reduce the flow and sale of merchandise, which could
disproportionately affect economies of Thailand, and Singapore, among others.
- National elections could also upset domestic markets, and potentially diplomacy or trade across the region. Elections will be held in Thailand (February), Indonesia (April), along with midterms elections in the Philippines (May). The campaign for Taiwan’s next presidential election in January will also soon be in full swing.
- Domestic uncertainties in the U.S. and potentially unpredictable actions of the U.S. Federal Reserve could rapidly and critically affect the region, as banks try to react appropriately to fluctuations in the U.S. dollar and market.
- The possibility of runaway inflation may also threaten several countries according to Jamrisko, with the country least likely to feel negative effects from inflation being the Philippines.
In sum, Southeast Asia can expect to see slow but steady economic growth, along with higher prices of commodities, and the potential for rapid increases in interest rates.
However, the Bloomberg report does suggest that the first half of the year will likely be more dismal that the second half, as global markets, trade, investments and interest rates will hopefully stabilize by late summer.