KUALA LUMPUR: Malaysia’s export has outperformed other Asean countries’ over three quarters of the year amid global trade uncertainties, according to a survey by Institute of Chartered Accountants in England and Wales (ICAEW).
ICAEW said Malaysia’s export had actually shown resilient domestic demand.
In comparison, growth of trade dependent economies such as Singapore, Thailand and the Philippines had seen momentum slowing more in the second quarter (Q2) of the year, ICAEW added.
The institute expects overall economic growth across Asean to have slowed down to four per cent in the first half of the year compared to 4.5 per cent in the second half of 2018.
This would be due to spillovers from the US-China trade war, slower Chinese domestic demand and a downturn in the global electronics cycle.
"Amid ongoing global headwinds and uncertainty around the outcome of US-China trade talks, we expect to see a further deterioration in economic prospects across the region, particularly among more trade dependent economies.
“Overall, Asean’s gross domestic product (GDP) growth is expected to moderate to 4.5 per cent this year, and stabilise at the same rate in 2020,” ICAEW economic advisor and Oxford Economics Lead Asia Economist Sian Fenner said in a statement today.
Against an increasingly challenging external backdrop, with lower US interest rates and subdued inflationary pressures, central banks across the region are expected to reduce policy rates to support domestic demand.
ICAEW expects Bank Negara Malaysia to lower its key interest rate by a further 25 basis points (bp) in December, with another 25bp cut in the first quarter of 2020, despite the out-performance of the country’s economy todate.
This is provided the government will continue to focus on fiscal consolidation in the upcoming budget announcement on October 11.
Meanwhile, after lowering interest rates by 50bp this year, the central banks of Indonesia and the Philippines are forecast to lower rates once more in the fourth quarter (Q4) of 2019.
Thailand is also expected to lower rates by at least 25bp by early 2020.
In Singapore, the Monetary Authority of Singapore is expected to ease policy in October, shifting to a zero appreciation bias in its key policy tool, SG$NEER, a trade weighted baskets of currencies against the Singapore dollar.
ICAEW said Singapore was likely to dip into a manufacturing-led technical recession in the third quarter.
Vietnam is set to continue to outperform the rest of the region, albeit with a moderation in its GDP growth to 6.7 per cent in 2019, followed by a further deceleration to 6.3 per cent in 2020.
If the US imposes higher import tariffs on Vietnam, GDP growth in the country is likely to be cut to 5.9 per cent in 2020-21 compared to a baseline of 6.2 per cent.
“We expect the challenging external conditions to continue weighing heavily on the overall growth across Southeast Asia economies, as well as on regional trade flows,” said ICAEW regional director of Greater China and South-east Asia Mark Billington.