IMF maintains high growth forecasts

 

In the latest World Economic Outlook released yesterday, the IMF forecasts 7.8 per cent growth rate for the country in 2014, 7.8 per cent in 2015 and 7.7 per cent in 2019. 

This is against the 7.5 per cent growth rate in 2013. 

The projections are above the average growth rate forecasts for the overall emerging and developing economies in Asia: 6.7 per cent, 6.8 per cent and 6.5 per cent in the corresponding years. 

Among Asian emerging markets, Myanmar's economic performance will be the second only to Mongolia's. The country is expected to show economic growth of 12.9 per cent this year, before falling to 7.7 per cent in 2015 and to 8.8 per cent in 2019. Laos came close with the projections of 7.5 per cent, 7.8 per cent and 7.5 per cent in the corresponding years.

Myanmar will also perform better than the Asean 5 - Thailand, Indonesia, the Philippines, Vietnam and Malaysia – of which growth will remain uneven.

Among the Asean 5, Thailand is expected to show the lowest growth rate this year, at 2.5 per cent. The forecasts for Malaysia, Indonesia, Vietnam and the Philippines are 5.2 per cent, 5.4 per cent, 5.6 per cent and 6.5 per cent, respectively.

Thailand is expected to show only 2.5 per cent in economic growth this year, said the International Monetary Fund (IMF), though the forecast for Asia as a whole is 5.5 per cent against 5.2 per cent in 2013.

In the World Economic Outlook report, the IMF said that Asia will benefit from the improved outlook in advanced economies, along side more competitive exchange rates in some cases, which will help boost exports. Domestic demand will continue to be supported by strong labour markets and still-buoyant credit growth.

While Indonesia's growth is projected to slow this year as subdued investor sentiment and higher borrowing costs weigh on the domestic economy, although the currency appreciation since mid-2013 should give exports a lift.

"In Thailand, the near-term outlook remains clouded by the political situation: the economy is slowing as private demand weakens and the public investment plans are delayed."

Malaysia and the Philippines, however, are on a more positive trajectory, and growth is expected to remain robust in both countries, the report said.

"(Japan's) slower growth could have significant negative spillovers for economies with strong trade and foreign direct investment linkages with Japan, such as Indonesia and Thailand - especially if the risk of deflation returns."

To tackle near-term vulnerabilities, Asia should continue to push ahead with structural reforms to enhance medium-term prospects. Generally, reforms should focus on removing structural impediments to growth in India and across the Asean economies through higher public and private investment (particularly in infrastructure).