RP, Indonesia free from Asian contraction amid global financial crisis

By: Reuters poll


MANILA (PNA) -- The Philippines and Indonesia are the only economies in Southeast Asia that will record growth this year, results of a Reuters poll survey show.

But the growth, Reuters said, "will be sharply slower than in previous years, particularly for Indonesia which will be hit by falling prices of commodities, the bulk of Jakarta's exports."

Reuters forecast growth of just 2.3 per cent for the Philippines this year, but it is lower than a similar poll last December that showed a 3.3 per cent estimate. It is also below government expectations for at least 3.7 per cent, due partly to lower remittances from overseas Filipinos.

Singapore will be the hardest hit, shrinking nearly five this year, the results showed, while Thailand faces its worst recession in 11 years. According to Reuters, the trend reflects a collapse in exports across Asia.

"The Philippines and Indonesia will be the only economies in the region to record growth this year but that growth will be sharply slower than in previous years, with Indonesia hit by falling prices of commodities, the bulk of its exports."

According to Reuters, Indonesia is not as dependent on export trade as its neighbors and is thus expected to expand by four per cent this year and 5.1 per cent in 2010 despite the glut in the export sector. Its exports contribute only about a third of Gross Domestic Product.

Reuters continued on Indonesia: "Still, the growth forecast is well down from a 4.8 per cent estimate in a poll three months ago. Weak exports and falling commodities prices weigh on growth, and analysts said the government needs to take further steps to support the economy on top of last month's US$ 6.1-billion fiscal stimulus package."

In Malaysia and Thailand, demand is hurt by crumbling exports. Thailand's economy is set to shrink 1.5 per cent this year while Malaysia will see a 1.2 per cent contraction. Malaysia launched a US$ 16-billion stimulus package after January exports fell 28 per cent, the biggest drop in nearly 30 years.

The poll forecast Malaysia would pick up slightly next year, with GDP growing 2.8 per cent while Thailand is set for a 2.9 per cent expansion in 2010, according to Reuters.

Thailand is Southeast Asia's second largest economy.