ASEAN Economic Forecast

Economic Snapshot for ASEAN

March 25, 2020

The fallout from the coronavirus pandemic appears set to annihilate growth in ASEAN in H1, especially in export-oriented Malaysia, Singapore and Thailand. Strong fiscal policy responses and monetary policy easing should buffer the blow somewhat, however. The outlook this year predominately hinges on how long the virus will derail global economic activity.

ASEAN Monetary & Financial Sector News

Regional inflation was stable at 2.6% in February, according to preliminary data. Price pressures waned in the Philippines, Thailand and Vietnam, whereas inflation was higher in Indonesia. Regional inflation is projected to tick up this year due to lower borrowing costs and fiscal stimulus. Restrained economic activity and ultra-low oil prices skew risks to the downside, however. 

Central banks in Indonesia, Malaysia, the Philippines, Thailand and Vietnam all cut rates in March in the wake of the Covid-19 pandemic, as financial conditions have tightened markedly and the global growth outlook has deteriorated. Regional rates will likely stay supportive this year as ASEAN combats the virus. 

Most ASEAN currencies depreciated against the dollar recently amid strong emerging-market aversion. Notably, the rupiah hit an over two-decade low, while the ringgit fell on elevated political turmoil. This year, nearly all regional currencies are projected to further depreciate on average against the USD due to depressed global sentiment and looser monetary policies.

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