Moody's unit sees Asean growing below potential this yr

MANILA, Philippines - Moody’s Analytics, a division of Moody’s Corp. engaged in economic research and analysis, sees the economic growth among the Association of Southeast Asian Nations – 5 (ASEAN-5) including the Philippines growing below its potential this year.

In a report, Moody’s Analytics associate economist Katrina Ell said economic growth in Southeast Asia including the Philippines would remain below potential this year due to heavy reliance on exports.

Ell said the average gross domestic product (GDP) growth among ASEAN-5 would improve to 5.1 percent this year and 5.4 percent next year from about 4.3 percent last year.

“But even with a solid pickup in consumer spending and fixed investment, these economies remain reliant on exports and, with global demand still soft, we expect growth across Southeast Asia to remain slightly below potential in 2012,” she said.

Moody’s Analytics said the Philippines is expected to post a GDP growth of four percent this year or slightly faster than Singapore’s 3.6 percent but slower than Indonesia’s 6.4 percent, Thailand’s 5.1 percent, and Malaysia’s 4.2 percent.

“We expect growth in Malaysia, Singapore and the Philippines to remain slightly below potential with weaker global conditions dragging on performance through 2012,” the economist stressed.

For 2013, the country would post a faster economic growth of 4.8 percent slightly faster than Singapore’s four percent but slower than Indonesia’s 6.7 percent, Malaysia’s 5.2 percent, and Thailand’s 4.9 percent.

Moody’s said the GDP growth of the ASEAN-5 slowed to 4.3 percent last year from 7.8 percent in 2010 due to weak global demand brought about by the economic slowdown in advanced economies led by the US and the debt crisis in Europe.

“Traditionally export-oriented, the ASEAN-5 – Indonesia, Malaysia, Philippines, Singapore and Thailand – have shown resilience in the face of weak global demand,” Ell added.

She explained that solid domestic demand has helped cushion Indonesia, Malaysia, and the Philippines from a gloomy external situation.

The economic growth of the Philippines slackened to 3.7 percent last year from 7.6 percent in 2010 due to weak global demand as well as the cautious spending by the administration of President Aquino.

“Steady remittances from offshore workers, alongside a pickup in government spending, helped to boost fourth quarter growth in the Philippines,” the report stated.

It added that President Aquino increased government spending as production and exports decelerated because of weak global electronics demand.