5% near-term growth seen for Asean-6

This was noted by Gundy Cahyadi, an expert in Southeast Asian economies at DBS who has more than 10 years of economic and financial-market research experience in covering the Asia-ex-Japan region.
The Asean-6 is a US$2.4-trillion (Bt84.5-trillion) economy with a total population of 550 million, with varying economic potential. Asean-6 economies that are less developed typically have the highest growth potential. But investing in these economies typically comes with higher risks as well. 
Economic potential will also be driven by population growth. In Asean-6, working-age population growth is set to decline, except for the Philippines and Indonesia, Cahyadi said.

Indonesia
Indonesia’s gross domestic product is predicted to grow by 5-5.5 per cent annually for the next few years, a high rate when compared with other nations in the region, Cahyadi said. 
Indonesia’s economy is primarily bolstered by the nation’s consumption rate, which is currently growing by 5 per cent annually. Technically, given Indonesia’s current state of development, the economy can grow by 7-8 per cent. 
The key to boosting growth is increasing production levels, as demographic dividends remain an issue for the economy, according to Cahyadi.
Speaking about a lack of productivity, the manufacturing sector is case in point. Contributions from manufacturing to overall GDP growth have been on the decline since 2011. And the issue is not just about global demand, as performance lags behind other countries in the region.
The government is pushing for stronger investment growth by liberalising the economy further, easing the process of starting new businesses, as well as the recent implementation of the tax amnesty law. 
The rupiah has remained generally steady against a basket of currencies since 2014. It is unlikely to see another sharp drop like what occurred in mid-2013, Cahyadi said. 

Thailand
GDP growth in Thailand is likely to remain under 4 per cent. Consumption growth is growing at slightly below a 3-per cent pace. 
The Thai economy could grow faster, maybe in the 6-per-cent range, Cahyadi said. The problem is there is still a gap between private-sector and public-sector growth. Thailand’s private sector is growing at 2.5 per cent, a significantly lower rate than the private sector’s 6 per cent. Private-sector growth must return to 4 per cent before overall GDP growth can return to its 4-per-cent pace. 
In the consumption space, household debt remains high at around 80 per cent of GDP, similar to Taiwan and South Korea. That households are de-leveraging also means there is a drag on consumption growth, Cahyadi said.
Tourism revenue is increasingly crucial to Thailand’s economy. While hotels and restaurants make up only 5 per cent of the economy, they have contributed nearly 20 per cent of GDP growth over the past three years. Manufacturing, on the other hand, has performed rather poorly. 
The baht has proved generally more resilient than the rupiah. The strong tourism flows help on this front, and the baht actually outperformed its basket of currencies between 2014 and early 2015, Cahyadi said.