ASEAN Economic Forecast

Economic Snapshot for ASEAN

October 17, 2019

Growth dynamics should improve in 2020 after the U.S.-China trade war weighed on the regional economy this year. Accommodative fiscal and monetary policies will support growth, while the recent easing in trade tensions could reduce headwinds. A slowdown in China and a potential reescalation of trade tensions are key downside risks to the outlook.

ASEAN Monetary & Financial Sector News

According to preliminary data, regional inflation edged down to 2.1% in September from 2.2% in August. Regional average inflation is expected to strengthen in 2020, partially due to cheaper borrowing costs and a pick-up in economic activity across the region. 

ASEAN central banks continued to loosen their monetary policy stances in recent weeks, with central banks in Indonesia, the Philippines and Vietnam cutting interest rates by 25 basis points. For 2020, a majority of panelists expect further rate cuts in Indonesia, Thailand, Malaysia and the Philippines, given subdued inflation outlooks and heightened external risks. 

ASEAN currencies displayed mixed performances in recent weeks owing to looser monetary policy settings in both ASEAN and the United States, as well as news related to China-U.S. trade talks. Turning to 2020, the regional average exchange rate is expected to appreciate slightly against the U.S. dollar due to strong regional growth and healthy current account surpluses.

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