Katrina Ell, associate economist at the Moody’s unit, said the deteriorating external situation will cap Asean 5 growth below trend at about 4.8 percent in 2011 and slightly weaker in 2012.
“Asean slowed markedly in the second quarter amid weaker global demand and supply chain disruptions stemming from Japan’s natural disaster,” Ell said.
She said Singapore was hardest hit, growing 0.9 percent in the second quarter, after expanding 8.3 percent in March.
In the Philippines, industrial production was hit through the electronics sector. In the four months following the catastrophe, production grew an average of 3.2 percent on a year-ago basis, a marked slowdown from 14.5 percent in the four months prior, Ell said.
“Asean’s tech-dependent economies appear to be faring badly as the deteriorating global environment has crimped demand for consumer electronics,” Moody’s Analytics said.
The Philippines is expected to grow 4.4 percent in 2011, while Singapore will expand by 5 percent. Malaysia is on track for 4.3-percent growth this year, weighed down by weaker demand for its export manufactures, Ell said.
Moody’s Analytics said monetary tightening in the region was “off the cards” given moderating inflationary pressures as global energy and food prices “come off the boil.”
“Meanwhile, moderating global conditions will flow through to slower production, employment and wages, reducing upward pricing pressure through 2012. An upside risk to inflation is higher rice prices, a staple food in Asia,” Ell said.
With most Asean currencies depreciating since August amid heightened risk aversion, imported inflation could add to price pressures, she said.
“Despite upside risks to inflation, policymakers are now focused on shielding their economies from global woes, though most Asean central banks have adopted a wait-and-see approach by leaving rates on hold. Unless global conditions deteriorate further, rates will remain on hold through 2011 and well into 2012,” said Moody’s Analytics.
Ell also said domestic lending conditions would tighten as accessing offshore funds would become harder and interbank lending would likely dry up.
“This would crimp business and consumer spending,” she said.
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